Watch Out for High Investment Fees!
Laura Adams, MBA
Find out what fees you’re paying on your retirement account by accessing your 401(k) or 403(b) plan online or by checking with your benefits administrator. Minimizing the expenses in your retirement account is a smart way to boost your balance over time.
The follow chart shows the damage high fees can do to your retirement account, assuming you invest $300 a month for 35 years with 7% annualized returns:
Annual Fees
Account Balance (after 35 years)
- 0.25% – $509,200
- 0.5% – $480,000
- 1.0% – $427,400
- 1.75% – $360,400
- 2.0% – $340,800
When funds have similar investment objectives and historical performance, choose the fund that charges the lowest fees. Starting in 2012, investors will get more help understanding 401(k) fees in retirement plans due to a new rule that will require more disclosure.
Man on Computer image courtesy of Shutterstock
About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.