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If you are like most people then you picked a fund for your 401k and have no idea what that fund really represents OR how much that fund is charging you in embedded fees. Unfortunately, you most likely chose a terrible fund and will end up with thousands upon thousands dollars less because of it.
That all changes today.
Let’s get into it.
Find your ticker symbol (usually 4 or 5 letters) of the fund or funds that you picked.
Let’s use one that a student of the courses chose (he is now in a different fund after taking the course). We are going to act like you are the student.
You now look at your 401k and see that your money is invested in a fund with a ticker symbol TRRKX.
Go to yahoo finance and put TRRKX in the search bar and here is what will come up…
Now click on “Profile” and scroll down to Fees and Expenses…
Do you see this .62%?? That’s not good. That is your retirement being chipped away by the tyranny of compounding fees. Let’s look at what these fees do.
If you see fees over .2% then you need to change funds ASAP
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Let’s look at why you need to change funds and what these fees really do over time.
Let’s compare this fund to a similar fund BUT one that is low-cost. In this case we need to find another target date fund (if you don’t understand what target date funds are vs large cap funds vs mid cap funds vs sector funds then I strongly encourage you to take “Stock Market Investing Made Incredibly Easy”). I do have a special offer at the end of this post though so keep reading.
I am going to compare TRKKX to a low-cost target date fund, ticker SWGYX
Let’s first look at how low-cost this fund is…
Not too bad .13%
Now let’s compare the two over time to see what fund does better shall we?
Would you look at that? In the past 5 years the low-cost fund is outperforming the high-cost fund. The gap will only widen as the years go on. These funds only go back 5 years.
Ok so now you looked at your ticker symbol on yahoo finance and the clicked profile and to your horror you see that you picked a fund that is charging you above .2%.
What do you now???
You go look at the list of options you have and select a low-cost fund.
The student saw that he also had the option of this fund…WFSPX (this is essentially a low-cost .03% S&P index fund)
Let’s compare the two…
This chart is only going back 5 years! The gap will widen immensely over the coming years. This student is happy because he will retire with thousands upon thousands of dollars more because he has freed his hard-earned money from the tyranny of compounding fees.
I urge you to do the same!
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About the Author
Brandon Bitar graduated from Geneva College in 2005 and enrolled in medical school in 2008. He left medical school in 2010 to pursue his passion, which is investing. He is a successful stock market and real estate investor.
In 2020, during the shutdowns, Brandon began developing online stock market investing courses. One year later Streetwise Investing was born. With the encouragement of students that went through his courses, he decided to launch the Streetwise Investing podcast and begin blogging.
He is excited to share his knowledge about investing with the world.