Personal Finance and Investing

If I am not mistaken, they require all their FA's to do that.

In defense of Edward Jones, they are one of the few brick and mortar brokerage houses that are even interested in the smaller account investors these days. That was AG Edwards bread and butter and they pretty much dominated that market before online trading became so prevalent. Now, Wells Fargo Advisors which AG Edwards eventually became, couldn't give two shits about you unless your account is 7 digits, 6 of them being zeros. It's a damned shame.

You may want to give the guy another chance, though. Here's why;

They, like most brokerages with a bond desk, have access to "Brokered CD's". These act essentially just like bonds in that they trade or are tradeable. There is no need to hold them to maturity, for example. You may find that the Jones guy has - say a ten year CD paying a bit more than what you have found elsewhere with perhaps 9 years to maturity. Or a 5 year note with only 3 years to maturity, etc. The thing is, as I mentioned, they trade in a similar fashion to bonds, so an older CD with a high rate, like 5% perhaps, is going to sell for more than its redemption value such that it's yield will be close to a note of similar maturity.



That may sound a bit strange, but the advantage to them is, as I said, your ability to sell them at any time. The commissions on them are very low so you don't lose a whole lot to paying the broker and you might be able to beat what you are finding for CD's elsewhere. Brokered CD's are still FDIC insured as well, so you have that safety factor.

(Edited to add that since they can bought and sold, there is no "penalty" so to speak, for selling before they mature. They aren't being redeemed early by the bank, you would just sell them to another buyer. You could hold them for 6 months, collect an interest payment and dump them. That sort of thing.)

Something to look into, anyway. It won't cost you a dime to have a conversation with the guy.

The other decent sized firm that still seems to be interested in the regular American is Stifel Nicolaus. They are a full service firm as well with a pretty good reputation.

I'm not trying to push you toward a broker by any means, so please don't misunderstand me. But you may find a sympathetic ear and someone who can genuinely help you, even though he may not be able to make his house payments from the commissions you might generate! If you don't get a good vibe from the guy or aren't comfortable, you don't have to do business with him. No broker like that will charge you to have a conversation.

Of course it is important to be aware that NO advisor, be it Vanguard, Fidelity, the fellow from Edward Jones - none of them, work for free. There will be costs involved in managing a portfolio. The key is either making it such that returns are so good, fees don't matter (not easy to do) or being prepared to pay something for either advice or management.

When I started with AG Edwards, the Money Market fund they offered was paying 4.5%! Four and a half on money market! Those were the days! You could buy one year CD's paying 5% all day long. The thing is, there is simply no reward for no or low risk. That is especially true these days. The primary reason CD rates are so low is the same reason the 30 year Treasury is so low - demand. The banks are flush with cash and therefore have no incentive to offer a decent rate for a time deposit. The Dow went from 14,000 to 6600 from late '07 through March of '09 and the money realized from the sales of equities that pushed that fall went into banks. A shitload of normal, everyday folks took money out of the stock market and put it into the bank.

I had not heard of the fund you mentioned so I took a look at it on both Morningstar and the Vanguard website. You're right - inception date of May 2, 2008 means not much of a history. The fund is a so called "Fund of Funds" meaning that for the most part, the holdings of this Mutual Fund are shares of other Mutual Funds, primarily other Vanguard funds. I read a bit of the prospectus and they seem to have structured this to pay out as if it was an annuity just without the insurance aspect.

The yield is pretty good at almost 7% but that translates to just under nine cents per share per month. At $15.72 per share, the $25,000 minimum investment would only pay $141.54 a month or just under $1700 per year.

Here's a link to Vanguards page on the fund;

https://personal.vanguard.com/us/funds/snapshot?FundId=1499&FundIntExt=INT#hist=tab%3A0

Here's Morningstar's page on it;

http://quote.morningstar.com/fund/f.aspx?t=VPDFX

Best of luck and hang in there.

Happy Holidays, Merry Christmas and Happy New year to you as well.