WHO’S BEEN SNACKING ON YOUR RETIREMENT?
It’s been said that the only certain things in life are death and taxes. Well, in retirement planning, there’s one more thing to add to the list — fees! We’ve been told over and over again to trust in Wall Street, but most of you know it’s not all it’s cracked up to be. In his book, “The Four Pillars of Investing,” William Bernstein said, “Whether you know it or not, Wall Street wants to steal your future.” He makes an excellent point, but the real question isn’t how much magically makes its way out of your fund and into their pockets, it’s what can we do about it? It’s all in the education. Demos reports that over 65 percent of Americans have no idea just how much Wall Street fees affect the long-term health of their investments. How can you fight the loss when you don’t even know what’s happening?’
In the early years of your 401(k), those fees may not have seemed to be that big of a deal, but in 15 years or more, the fees exacted by Wall Street begin to take larger and larger bites out of that fund. If you started your 401(k) adventure in your 20s, by age 65 nearly 27 percent of your retirement funds are funneled directly into Wall Street, bypassing you entirely. Those fees are eating your retirement, and that’s bad business for your future and a compelling reason to ditch the stock market altogether.
With your education in hand, there’s little reason to leave your money in actively managed mutual funds gobbling up your investments.
Studies tell a pretty scary story. Management and trading costs were listed at close to $100 billion in 2006, which is a huge leap from the near $7 billion of the 1980s. That number is steadily growing, but you can do something about that. Managed funds are at the heart of the problem, so the first step is to take your money out of that casino. If you absolutely must invest in stocks and bonds, look at alternative index funds. While your annual rate of return will be less than an actively managed fund, index funds lack the profit-gobbling performance and management fees that eat away at your retirement. Another option is, of course, to kiss Wall Street goodbye altogether. Alternative investment opportunities hold a wealth of potential to provide for a healthy and happy retirement that puts you in control of the game.
This information is provided for your information, Financial Forensic Services, LLC neither endorses nor has an opinion as to the accuracy or validity of the information in this article, nor does it accept any responsibility whatsoever for any action taken or not taken as a consequence of this publication. Investments in securities involve the risk of loss. Past performance is never a guarantee of future returns.
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