Wednesday, October 03, 2007

My T Rowe Price Account is Set Up

I checked out my T Rowe Price login and it looks like my account is now set up. Haven't put any money in it yet. I guess that will happen on the day that I scheduled. Or they might have just changed it for all I know. Anyway, the "Dashboard" as they call it is pretty busy but also very tight, lots of tools and research at your finger tips and you can customize it. The view is dominated by your portfolio which is nice except mine is empty. ;-(

But there was a short video that walks you through the site and its features. Probably worth the eight minutes of your time.

I had a conversation during a sushi dinner (I know, lost some focus, but I did pay cash) with a coworker, and I was telling him about this and he asked about fees and I'm still not sure if there might not be some fee when you do a transaction. I'll just wait to see next month. But here is their wording that seems to relate: "A short-term trading fee of $5 applies to shares purchased systematically and held less than six months. These fees are in addition to any short term trading fee charged by the fund. The short-term trading fee is waived for T. Rowe Price funds, however individual fund redemption fees still apply." I think this means I'm safe unless I sell them in less than 6 months.

Speaking of fees, In my B Class share portfolio (mistake, thought I had to, I stopped and moved to A shares) I traded all the shares for the under performing fund(BALBX) for the biggest performing fund(CIBBX). I'm no expert but I looked at the performance of all of the funds that I have against the market indexes and they really just followed them. It is not the case of this fund being down when the others were up. So this wasn't a reduction of diversity. It was shucking a loser (compared to the others). But that is my asshole opinion on it. If I do not incur any fees from the deal, I will not shed a tear for BALBX. I do however miss having no load and index mutual funds available in my SIMPLE-IRA.

So anyway, it is probably a good thing that I had B shares to begin with. When I started my contributions, I was I put money into 7 different B class funds - split 6@%15 + 1@%10. I then figured out that I was in fact able to buy A class funds instead, I moved contributions to those. So I have a pretty clean break on where I ended contributions on these funds and any and all growth from those funds I can simply annualize and get a proper return on my investment. I even have a clean break when it happened between December and January 2005.

So I was doing some analysis on my portfolios and was figuring out true anualized total returns for the two portfolios. This means that I was comparing the money going in, and dividing where it was at today. I realized that the B share portfolio was kicking the A share portfolios ass using this math, which shouldn't be possible because of the higher expense ratios of the B share class. Then it hit me were the A-Share porfolio was taking it. THE LOADS! and I don't even know if that includes a sales commision for our local administrator.

The B-Share portfolio does get added to anymore and its growth is all, well actual growth. The A share porfolio's growth (hopefully!) is a combination of growth, contributions, and fees. I make variable amounts each month so that limits trying to figure out how much might be getting sucked out because of that. But it is also less that 3 years old so these fees have a much larger impact than it should in the future. I need to investigate if there is a difference from the contribution to the actual purchase that occurs.

Some good news that I discovered about the A share sales charge is that it diminishes more as your portfolio grows. But thats at big numbers. But when you are in a SIMPLE-IRA, your portfolio is lumped with everybody else in your company that participates, and you get a discount on the total.

Something to figure out: Is the reduced sales charge applied by the fund or by total of all funds?

Something to figure out: The B shares convert to A shares after a certain time. Do they all convert at once or in the sequence you bought them? Is that a stupid question?

But it was learning all this, and seeing the effect that has really inspired me to get psyched about opening a separate IRA and taking more control of where my retirement money goes. I currently contribute 9% to my SIMPLE-IRA, and I bought into the belief that I need %15 going to retirement. I'm torn between reducing that to just the match and putting the rest in my new Roth IRA. Or using that money to accelerate the debt snowball and then maxing the Roth when that is done (or much lower). Or leave it because, as the B-Share portfolio is performing ok with its crappy expense ratios, its A-Share counter part should be as well, except for the fees.

Inertia is a powerful force and the goal of leaving it at nine and maxing out the Roth seems doable as well. Maxing out the SIMPLE-IRA would actually be less costly, but it would mean less for the Roth. Maxing out both? Not an option. There are also spousal IRA considerations. If my wife has one too that is another $5000 (2008) that could go into Roth land that I could help her achieve with money that is now or might in the future go into the SIMPLE-IRA.

So there is still a lot of figuring out what to do.



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