Every penny counts in this life, and that’s doubly true in retirement — so please don’t waste your hard-earned money on fees.
Interest rates are at historically depressed levels, making it harder than ever to generate a decent stream of income. That makes it all the more imperative to husband your resources and not overpay for performance.
Consider that the average actively managed mutual fund fee comes to 1.07%. That’s $107 for every $10,000 invested.
If you give $100,000 to an active manager, your expenses come to $1,070 a year just for the privilege of investing in the fund. That’s over $89 a month!
In a time when the average monthly Social Security benefit is only $1,230 a month and one-year CDs pay 0.75% … well … $89 a month is a material amount of money to a retiree.
At what do you get for your $89 a month? About an 80% chance that your mutual fund manager will fail even to keep up with the performance of the market.
When it comes to retirees choosing the best mutual funds, it’s a no-brainer to look for as much income as possible with the least amount of risk. Too often, however, investors forget about those fees.
That’s why we looked for first-rate mutual funds for retirees that also have rock-bottom expenses. Spoiler alert: They’re all from Vanguard, because it’s essentially impossible to beat them on pricing.
Here are some of the best mutual funds for stingy retirees that we found: