Look at that. If you put your investments into a mutual fund that averages 7% a year, same $100 a month, same 20 to 67 years of investing, but just 3% less return on investment, and instead of making $1.3 Million, you end up with $430,000. So there you go. That is the Ledisi March & April 2024 Poster shirt In addition,I will do this best advice I can give on this topic. I could say more, but then I could talk about this stuff for hours. I hope any of that helps. If you have any other questions, leave a comment, and I’ll try to answer. In principal, a 401k is a great idea and opportunity. It’s money saved pre-tax with a corresponding match of funds from your employer to a certain amount (typically 5%). That’s free money from your company -what can be better than that! The problem lies with the limited investment options many people have for investing that money. I loathe mutual funds with their hidden fees and lack luster peformance. The vast majority can’t beat a simple index of the S&P 500, yet this is the default option most people choose. The majority of people have no idea how to evaluate a fund, can’t decipher all the financial double talk in the prospectus, and have no idea what the real fees are. So they pick one, and don’t look at it for years. Even options that allow you to self direct your investments come with many restrictions.
What’s worse is that the Ledisi March & April 2024 Poster shirt In addition,I will do this average person has been trained to believe that mutual funds are a good investment. A percentage will know to look for “no load” mutual funds, even if they can’t explain what that really means, and there are funds that claim to be “no load” that still charge fees. A handful will know that index funds are a better option than mutual funds, but can’t name one. This leads to billions of dollars being funneled to overpaid and underperforming money managers at the expense of everyday people who can least afford it. Millions of dollars in fees are paid without a second thought. It supports an industry that wouldn’t exist at the size and scale it does without the employer 401k program.
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