I bet if I asked you the amount of your monthly car payment, you would know. The same goes for your mortgage, rent, or association dues. The most important bills we pay each month are permanently etched in our minds.
In late January, TD Ameritrade published a survey of 1,000 individual investors. Unfortunately, there was no surprise in the results.
96 percent of the people surveyed know exactly how much they pay each month for their streaming services like Netflix, Hulu, and Spotify. Just 27 percent of those same people know how much they pay in annual fees for their company 401(k) retirement plan accounts.
Even worse, the survey found that 37 percent of those individual investors thought they don’t pay any annual fees for their company 401(k) retirement plan account. These individual investors actually think their retirement plan account is free.
Until very recently, the U.S. stock markets have gone almost straight up since March 2009. Until the last couple of weeks, individual company 401(k) retirement plan participants have not had to make a serious investment management decision in almost nine years.
It is one thing to “set-it-and-forget-it” when company-matching, annual contributions, and stock market action take individual company 401(k) retirement plan account values to all-time records. Inattention and neglect in that environment does not have any investment management consequences.
As of now, annual company 401(k) retirement plan mutual fund costs are the second worst enemy of individual investors; right behind historic stock market losses.
It is very likely that the worst-performing mutual fund options on your default company 401(k) retirement plan menu are also the most expensive to own. Are any of these mutual funds in your current company 401(k) retirement plan account?
Expensive and under-performing company 401(k) retirement plan mutual funds suffer the worst losses in stock market declines. These same mutual funds also lag on the upside when the stock market finds a bottom and recovers losses.
Don’t continue to suffer the “double whammy” of owning underperforming and expensive company 401(k) retirement plan mutual funds. Your retirement savings deserve much better.
Ric Lager
Lager & Company, Inc.
