Now, this topic is often times discussed in the media, but does an average John Q. Public (in our case, JQ Public, MD) know what exactly he/she is paying for a privilege of having his retirement money to be exposed to the vagaries of the market?
My unscientific poll of my colleagues shows that 99% of them are oblivious. Seeing the outrage on my face when I spoke about those fees, they politely nodded their heads, but that was it.
To me, the asset-based fee of 0.33% PLUS monthly maintenance fees (that's what our 401k plan extracts-if not expropriates) amount to nothing less than a highway robbery.
Given the market projected return (risk premium, on top of risk free rate of 2.5% delivered by Treasuries), the asset based fee alone amounts to at least 10% of return!!
And we are not even talking about the expense ratios f the funds contained in 401k (average expense ratio is about 1-1.3%).
So right there, we're giving up close to 50% of potential return, while owning the 100% of risk.
But what else is there for retirement vehicles for middle class? (gasp)
My unscientific poll of my colleagues shows that 99% of them are oblivious. Seeing the outrage on my face when I spoke about those fees, they politely nodded their heads, but that was it.
To me, the asset-based fee of 0.33% PLUS monthly maintenance fees (that's what our 401k plan extracts-if not expropriates) amount to nothing less than a highway robbery.
Given the market projected return (risk premium, on top of risk free rate of 2.5% delivered by Treasuries), the asset based fee alone amounts to at least 10% of return!!
And we are not even talking about the expense ratios f the funds contained in 401k (average expense ratio is about 1-1.3%).
So right there, we're giving up close to 50% of potential return, while owning the 100% of risk.
But what else is there for retirement vehicles for middle class? (gasp)