Mutual fund question? wtf?? lol?

Question

i am 14 and i have 3k in my ira and i have a question. I own a mutual fund because it gives better returns after fees that etf's give and it doesnt charge a commision to buy it.

So is net expense ration paid at exacly the end of the year from when I buy the shares? What if i buy shares at diffrent times?

Also, does it take the money out of the mutual fund as shares or something? how is the expense paid?

And does the expense ratio charged to my gains or my total amount of shares?

also would it make sense to sell my mutual fund after (90 days from today so i dont have to pay the early redemption fee) and buy an etf for my ira?

Would i be making more money doing this way? Thanks

AMAGX

Answer 1

Mutual funds may take out the fees on an annual or quarterly basis.

It does take out the fees as shares.

The expense ratio is based on the size of your holdings

It would not make sense to sell the IRA in favor of an etf unless you think it will generate a greater return for you.  Remember, and IRA is for retirement, so you have 50 years or so to go.  Don't worry about trying to avoid fees, or timing the market, you will do very well in the long run if you have a decent fund.

Answer 2

generally, fees on an etf tend to be be slightly lower than comparable mutual funds.  but we're only talking a few hundredths of a percent, so it's not too different.

for you, i would say that you're probably better staying in the mutual fund if you contribute regularly, unless the mutual fund has a front-end load, which is just a hidden commission, anyway.

if your fund has a front-end load, then figure out which is cheaper - however much the load is (maybe 4%) or a commission you would get from a broker (maybe $10).  really, it depends on the size of the contributions you make.

also, one of the nice things about mutual funds is that you can contribute however much money you feel like.  if you buy an etf, you usually have to buy whole shares (so maybe $50 increments, instead of $1 increments in a mutual fund).

Answer 3

Well, you've got some pretty decent " holdings" in AMAGX...so, probably, your best course of action is stick with it for awhile.

In a fund, you are counting on the manager/staff to make moves that will increase your returns...in an ETF, you are just investing in almost everything in a particular sector and hoping for the best. ( in a bull rally market, that will work, but right now some expertise is needed )

Secondly, outside of some kind of " index" ETF, I don't see how you could be as diversified as you are in your fund. So, really, just let it ride for awhile.

P.S. Fees ..schmees...don't get caught up in that mindset...when your fund " cooks", the fee is a joke... ( and your fund has that potential)