Give Fees an Inch, and They'll Take a Mile
by Jeff Sommer in the New York Times, 3/2/2014. Note, also, that the article has the following important link to a Securities Exchange Commission bulletin
How Fees and Expenses Affect Your Investment Portfolio
In the SEC bulletin article, you'll find the following table:
|Source: Securities Exchange Commission|
CLICK TO ENLARGE. The chart shows that, on $100,000 over 20 years, a seemingly small 1% fee will take $28,000 from the nest egg. Assume 4% growth in the foregone funds, and it costs another $12,000.
Plan administrators need to understand these numbers and at least offer inexpensive funds to plan participants.
Many individuals have a broader problem, of course. You may have rolled over IRAs and taxable accounts. Understanding how fees affect the overall structure of these accounts over the long-term and minimizing these fees are one of the best ways to use your time in preparing for retirement. If you are a bit shaky in this area, find a fee-only financial advisor and get hourly consultation on your overall fees. Again, it could be one of the best investments you ever make.