QUIKAG

Wife cashed out a crappy life insurance policy on her parents that she's had since 1990. It has a fairly sizeable surrender value and now the cash is sitting in our money market account. Her family's financial planner wants to invest the entire proceeds immediately into CWGIX. We can avoid the 5%+ front load that American Funds charges by running the purchase through her parents account.

What do you guys think? CWGIX seems like a stellar mutual fund and avoiding the front load makes it an even better option. So, presuming you guys are cool with CWGIX, when I should plop the money in there? Should I dollar cost average it in over a few months/years or just do it.

For perspective, the amount is roughly 1/3 of our investable assets right now, so it's an amount I don't sneeze at, but long-term I guess it's not that big of a deal. My investment time horizon is 20+ years.

Any comments from the greats in here would be appreciated.

trainwreck

5% front load! wow. that seems expensive. I think it would be more efficient to dump the cash into a index ETF, you would have a 5% headstart over the mutual fund.

QUIKAG

I said I could avoid the 5% front load by running it through her parent's account. If you have enough invested with American Funds, you don't have to pay the front load.

WyattH

I'm never a fan of mutual funds... Especially since most are slowing down.
However, I am not familiar with this particular one.

In 20 years, 2-4% wont be a huge difference (if that makes sense).. So trying to find the bottom now might not be a big deal. FWIW, I would hold out a little longer and wait for a nother pullback. This week has been pretty good. Maybe next.

trainwreck

if u just want to check on it 20 years from now, i think cwgix is fine. it performs similiar to what i have, dodfx.

however, if you want to be a little more aggressive, china and india etfs, with maybe a little russian in there.

cthree

Well, it's good to have a nice chunk of investable capital.

I think it may be a good opportunity to re-evaluate and re-balance. It's great to plan to be rich in retirement but there is something to be said for having a good life before then.

How's your mortgage? Paying it off or a part of it would add a significant amount of free cash flow. You've got long term investments, what about short and mid term? Have you gone over your current investments to see what you own (what the mutual funds contain) and which areas you are under and over exposed?

How's your job? Have you considered starting a business or buying a franchise?

Got kids? Do you have the money to send them to university?

Got Debt? Pay it off. Living debt free is pure bliss.

My life doesn't start at 65, it's damn near over and I don't like the idea of peaking late. It sounds like you've got an opportunity to change the outcome of your life if you so desired. I'd take a step back and check your roadmap.

WyattH

^ wow. good.

sahtt

cthree has some great REALISTIC points not just jargon everyone hears on the radio and news.

What are you paying interest wise on your house? What do you expect to get from your mutual fund investment after taxes? There are few guarantees in investing-paying off your house is one of them.
If you are paying more than 6.5% interest on your mortgage I'd pay it off. That equates to over 8% in the market before taxes [not to mention fees], good luck with that with a mutual fund.

IMO, mutual funds are a thing of the past.

Research Index Funds and ETF's. They are the new mutual funds and you don't need to be a trader genius to select good ones. I'd look at the regional bank ETF, I think* it's KNR, as well as a good index fund that follows the S&P or along those lines.

You should CERTAINLY not have any debt besides your mortgage before you invest this money.

QUIKAG

Housing debt is a non-issue as the rate is very low and it'll be paid off in a few years (Lord willing) with bonuses.

I have cash in a high yield MM for 6-12 months of living expenses plus any accumulation for future expenditures (i.e. furniture, cars, etc.) Everything else is invested for retirement.

Job is great and stable. No interest in starting my own business.

No kids yet, but their education will be provided by their grandparents when we do have them. It's already been set-up.

No debt other than a mortgage and a fixed 2.x% education loan for my wife's grad school. It's under $20k and only $110/month. Not point in paying off a fixed 2.x% loan.

I'm 30 and planning on retiring at 50 (55 if I'm having fun). I'm on track even without inheritance, so all bases covered there.

As this money originally came from my wife's side of the family, they are gently pushing towards me doing CWGIX based on their(our) advisor's recommendation. I have a blend of ETF, index funds, and mutual funds. I've read at length the benefits of very low cost index funds and I like the idea and am shifting more and more money in that area. All my actively managed mutual funds are under 1% management fee, so I'm not getting ripped or anything.

So, anyone have any comment on CWGIX as that's probably where I'll need to invest? Their track record is very, very impressive.

sahtt

[QUOTE=QUIKAG,Aug 24 2007, 06:53 PM] Housing debt is a non-issue as the rate is very low and it'll be paid off in a few years (Lord willing) with bonuses.