Great moments in defensive retorts

[Lou Schuler]

I've spent part of the afternoon setting up college 529 savings plans for my three kids. Each of them has accounts set up before 529s existed (or at least before we knew about them), so I have to cash those out and transfer the $ into the new plans.

The first account is one I set up for my son back in 1996, the year he was born. He had a brief career as a baby model, with two paying gigs that earned him a total of $550.

I put that money in the Putnam New Opportunities Fund, which at the time was the only one I could find that allowed me to start with such a small amount.

Today the account is worth $638. In 13 years, it's earned $88, or 16%. In my view, this says a lot more about my financial stewardship than it does about Putnam -- it's not their fault I kept my money in their suck-ass fund for 13 years.

I called Putnam to request the cash-out form.

The operator I spoke to warned me that this was "a taxable event." I laughed and said there's no tax liability when you don't make any money. Her response: "Sir, that's because you bought at the top of the market."

I looked it up as soon as I got off the phone. On November 18, 1996, the day I opened the account, the S&P 500 was at 737.02. Today it's at 1042.87 -- 41.5% higher. So her reaction to my implied critique of her company's shitty fund is to tell me it's my fault for buying at the top of the market ... which actually occurred 3.5 years later, in March of 2000.

Had I sold the shitty fund right then and put the money into a shoebox, my son would be better off than he is now.

No real point here, except to laugh about somebody getting defensive over something she had no control over.

[RedLefty]

You probably did actually experience significant gains. But you also paid lots of fees.

Double whammy, because you paid fees and you may have capital gains.

My first 401K was with Putnam and I got the hell out of it as soon as possible. Some of the funds had expense ratios of almost 2%! Now we pay about 0.09%.

And the vast majority of those funds that charge a premium actually underperform the market as a whole. Shell game.

[eastcoastsurfer]

I know Vanguard has higher minimums to open an account, but they have great funds and super low expense ratios. Stick with the standard DOW, S&P 500, wilshire 5000, etc... funds.

And for savings check places like ING. They offer some of the best yields around for zero risk.

[RobLL]

I dumped $2000 into a USAA IRA account in 1987, growth funds and international. It is now worth $5000. If it had been growing at 10%, in 22 years it should have doubled twice plus, over $8000. And given two big stock market booms there is little excuse except poor management. I keep it cause it is not really a factor in my financial security, and it is a big joke. The rest of my investments went into real estate which I managed myself. We did well.

USAA's big hit was investing heavy in tobacco stock. I called them, and suggested that it was about a moral as investing in a mafia hit company. They were not amused. But by that time the damage was done and I did not see any benefit in cashing out.