Need advice on how to invest!
My grandmother passed 3 years ago and left me a very generous and much appreciated inheritance.
The inheritance included her Edward Jones portfolio. Hers was set up for income as she was risk averse and also deducted a certain amount of the interest income each month. I have pretty much left the account as is because I am deathly afraid of messing anything up. The first two years the account was returning a nice 6%, but this year it has done virtually nothing. I am paying income taxes on this interest income that I really do nothing with, so it's almost like a penalty to me with no benefit. I also have almost 50,000 in cash that has accumulated that is just sitting there. Obviously I know that I need to do something.
It is about $300,000 and I also have more in cash from the sale of her home that I don't know what to do with. Right now the account is set up as follows:
About 50K in cash from all the interest and dividend payments that are just sitting there doing nothing.
2 corporate bonds with So Ca Edison and Select Notes Trust Securities at about 20K maturity value. They are currently both worth more than the maturity value. Maturities in the 2030s.
5 Asset/Mortgage Backed Securities about 100K. These are with FHLMC, Fannie Mae, and Ginnie Mae, all earning 5.5%. The value on these has remained pretty constant and they are all worth more than the principal. Maturities are in the 2030s.
1 Unit trust with GNMA. Value seems to be way down on this one. Only about 5K invested, but worth only 3K right now.
2 mutual funds--about 100K combined, about half in Bond Fund of America and the other half in Capital World Bond Fund.
The value of the total account has increased every single month since I acquired it, on average by about 1K a month, until this month when it decreased by about 2K. The drop has been in the bond mutual funds and the 2 straight bonds mentioned above.
Here is what advisor wants me to do---
Sell off everything except the existing bond mutual funds. Invest about 3/4 of the total into 2 mutual funds: half into American Funds and the other half into MFS (Massachusetts) Funds. There would be about 10 different funds within each group, with a mix of income, growth, and aggressive growth--most in the growth category. The remaining 1/4 into Invesco Unit Trust Global 45 Dividend Strategy.
He said it's better to have 2 funds with different managers for diversification, but of course that means my "breakpoint" will be 3.5% instead of the 2.5% if I used only 1 fund group. He really didn't offer any other suggestions which made me feel like this was really kind of cookie cutter advice. These are class A funds so I would have to pay between 5 to 8K (depending on whether I go with one or two fund groups) right off the top, which I really don't like.
I asked about other classes of funds, which he really discouraged. He said for Class C there is no up-front load, but the yearly "expense" percentage is something like 1.4 percent instead of .7 percent for class A. Also if you withdraw from Class C before the year is up, there is a penalty. Since I definitely plan to keep for at least a year, I don't think that is a concern. I'm not sure if the math really works this way, but he said Class A is better in the long term because the higher yearly expense works out to be more even with no upfront load. But wouldn't your money also grow faster with no upfront load?
I have a degree in Accounting and a Master's in Business, so I know how this stuff works in principal, but I really don't know all the angles and want to educate myself to make sure I am not making stupid mistakes with this amazing gift that many people are never fortunate enough to get.
Can anybody here tell me their experience with places like Edward Jones? I know you can't tell me exactly what to do, but I would like your opinions. Also please direct me to some books that I might read to expand my knowledge. Due to my job I unfortunately don't have a ton of free time, but I need to do what I can to become informed.