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Q&A: Keep Oppenheimer?

Q:

My father recently passed and left an inherited IRA to myself and 4 siblings. It is currently in the Oppeheimer Fund OMSOX. Would you recommend staying in this fund? If not, what would you advise? I currently have around $24,000 in the IRA. I am retiring in February, 2015, and do not need the RMD from this IRA to supplement my retirement income. If not, what would you advise? I currently have around $24,000 in the IRA. I am retiring in February, 2015, and do not need the RMD from this IRA to supplement my retirement income.

A:

Oppenheimer Main Street Select A ("A" means your dad paid a 5.75% commission to some less than scrupulous broker) has almost everything going against it. It's actively managed, which we hate. The annual expenses are high at 1.14% per year (and, strangely enough, Morningstar considers that "low"). It has consistenetly underperformed the S&P 500 with much less diversification (less than 50 stocks) and a considerably higher level of volatility. In my research, I was unable to find a single redeeming long-term quality.

I think it's time to take your portion to our good friends at Vanguard (from whom we receive no compensation, whatsoever) and open an IRA or, if you can afford to pay the taxes, a Roth IRA (will grow tax-free forever). Simply split the money, based on your aversion to risk between our simple "two-fund solution;" Vanguard World Stock Index (VTWSX) and Vanguard Total Bond Index (VBMFX). 

 

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