Among the predictable avalanche of New Year’s resolution articles regarding financial behaviors, I read a very insightful article on The Motley Fool this week.
Jordan Wathen wrote a good summary on the comparison of annual fees for the different types of mutual funds found on company 401(k) retirement plan menus.
Your company 401(k) retirement plan provider and sponsor are required to disclose exactly how much annual costs take up your mutual fund investment returns.
When is the last time you calculated how much money your company 401(k) mutual funds cost you each year? My guess is that it has been a long time.
Record stock market returns and all-time high individual company 401(k) retirement plan account balances tend to take an individual investor’s eye off the issue of annual costs.
Your 2017 year-end company 401(k) retirement plan account statement is due in your mailbox in the next few days. The year-end summary is the perfect document to completely analyze your annual mutual fund costs.
You made a great deal of money last year in your company 401(k) retirement plan account. How much did those record investment gains cost you?
More importantly, do you currently own the lowest cost mutual funds available to you on your default company 401(k) retirement plan menu? Are you getting the annual investment returns that you are paying for?
I am willing to bet that you own at least one company 401(k) retirement plan mutual fund that lagged in investment performance versus the other mutual fund options available to you. And, that mutual fund is among the most expensive mutual funds on your company 401(k) retirement plan menu.
The technology available today provides institutional level mutual fund analysis for every company 401(k) default retirement plan menu. Ask your current investment advisor to help you analyze your annual mutual fund costs. Then rank those mutual funds on an annual cost versus annual investment performance matrix.
Very few individuals are comfortable owning the most expensive options available to them, at the same time sacrificing performance. Your company 401(k) retirement plan mutual funds should not fall into the category.
Ric Lager
Lager & Company, Inc.
