ROTH IRA Increasing my contributions?

First of all, it's generally not wise to mix money issues and friends, if you want to keep both. And then, she's a friend you don't trust?

You don't go into detail about what you have right now, but if only two funds she might very well have a good point that you need more diversification. Many people have several, some staples like a total stock market or S&P fund, plus some more aggressive funds like international stocks, small or mid caps, sector specific mutual funds, and so on.

As to how much she makes, you need to check the prospectus and reports. If you pull money out and buy a new fund, she will get her cut.

Which brings us to the next point - you are *seriously* getting hosed with their 5.75% sales load and ripoff 12b-1 fee. That means that about 6% of your money is being pickpocket from you before your money can even start working for you. You should seriously consider moving your Roth IRA to a better place without the ripoff fees, like Vanguard, T. Rowe Price, Fidelity, or Schwab.

For more information, try looking at

https://personal.vanguard.com/us/funds/vanguard/al...

and play with it, comparing funds with more or less risk.

Do some reading online such as

http://www.vanguard.com/us/insights

for some important investment truths, as well as Mutual Funds For Dummies.

My guess you mean funds (not accounts).

Most people have 1 ROTH IRA account that you can contribute to many different funds. I also have a American Funds Roth and think there is about 15 or more different funds I can invest in. All I do to invest in a new fund is tell American Funds to put X dollars in that fund.

The financial advisors makes the money on how much you contribute not based on what you are invested in.

You can log into your online American Funds account and see what funds you are currently investing in and what funds you are eligible to invest it.

There are two elements to your question. The 401k plan or a Roth IRA are just mechanisms to manage your income tax obligations. There are also Roth 401k plans. Whether you choose one plan over another is based on when does it make the most sense to pay your income taxes, now if you are in a low marginal rate income tax bracket (say 15%) now or when you retire and start withdrawing the money. Risk is based on the investment options that you choose. You can choose an even more riskier investment option in a Roth IRA just as easily. The critical element is that if you are chasing high rewards or returns, you will experience greater volatility or risk. You may want to go over your investment choices with the representative of the 401k plan administrator to develop a comprehensive plan that matches your risk tolerance. The 401k representative should be authorized to provide guidance where the IRA provider has restrictions on how much advice that they can offer specific to your situation.

You likely would gain a benefit from being in more than two funds. My portfolios are constructed of 5-8 funds to achieve proper diversification. if she is commission based then she does get a higher percentage if she puts you into another fund family and you have not hit breakpoints. If she is recommending other American Funds then she doesn't get any higher amount of commission than she would if you put your money into the two funds you already have.

If you are in a fee only setup then it doesn't matter either way, she gets paid the same. I feel like this is the best setup for most situations and you should ask her about being fee only if you aren't already. This means she gets the same compensation regardless of what funds you are in so it allows you to diversify and be in best of breed funds without paying maximum commission on all.

I believe that she might be correct in her advice to you. She is going to make the same amount whether you contribute to your existing accounts or invest in two new funds. It is 5.75% no matter what. If you have been investing in two funds for the past 5-6 years you might not be so well diversified as you might should be. Are you invested in a foreign stock fund such as the EuroPacific Fund? I wouldn't put a great deal into that one but I would consider putting some. It will help diversify your holdings. What does she suggest and what are your currently holdings?

It really depends on what those two funds are investing in. It can be VERY possible that you are not as diversified as you think. If she did not make SPECIFIC recommendations, then it would be almost impossible for her to make money since she has no idea WHAT you would open.

Adding money to existing Mutual Funds costs you the exact same money as putting it into a new Mutual Fund (5.75%).

She's trying to do the right thing by you. It's all extra work for her. Not one additional penny.

Should you be dealing with an adviser? I refuse to pay 5.75% for something that's easy enough to do for free. I've now been doing this since 1982.

READ:

Mutual Funds For Dummies

(You'll save 10's of thousands of dollars over a lifetime. Give it a shot)

Having said that... your adviser sounds fine!

We don't know because we don't know what two funds you have now - and therefore can't tell how diversified you are or what she is suggesting. You provide no specifics. You shoujld be asking HER. If you are picking your own investments, why do you need an investment advisor?

I would personally sell out and use the money to buy gold, silver, agriculture and junior miners. But that's just me.