Steer Clear of These 5 Retirement Pitfalls

Simple mistakes can really hamper your retirement goals

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Steer Clear of These 5 Retirement Pitfalls

Ignoring Expenses

Like all good things in life, your retirement ain’t free. Not only do you have to put your own money to work, but you have to pay a 401k provider, mutual fund managers and other others to put your money to work via various fees and expenses.

Thing is, not all those costs are the same — some are more expensive than others, so ignoring these fees and charges when investing can actually impact your returns.

For example, say Mutual Fund A and Mutual Fund B both offer relatively similar exposure and performance in large-cap stocks. Fund A charges 0.5% of expenses, or $50 on every $10,000 invested, while Fund B charges 1.5%, or $150 on every $10,000 invested. Assuming a 6% annual return over 30 years, Fund A would cost you roughly $3,800 in expenses alone, while Fund B would cost you more than $9,500 — and that’s not even factoring in what you’ve lost in opportunity cost.

Here’s something a little less hypothetical: Online financial adviser FutureAdvisor says investors are losing more than $100,000 over the course of 40 years because of fees an expenses. Those numbers are real, and they’re real big. So know your fees.


Article printed from InvestorPlace Media, http://investorplace.com/2013/07/steer-clear-of-these-5-retirement-pitfalls/.

©2014 InvestorPlace Media, LLC

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