What is Your Retirement Plan? - Post 2

So what is your retirement plan? Do you have a pension, 401k, IRA, Roth or other?

Today Seniors have almost 4 trillion invested in 401k plans. Many of these plans are invested in mutual funds and other high-fee investments sold by Financial Advisers who sell the client on what produces the most fees and profit for themselves not for you.

This can be a disaster for your retirement savings. Ad in taxes and it is no wonder why people are afraid of their retirements not carrying them until their death.

Unfortunately, you are risking your money and having to decide what to invest in. You probably know little about investing.

Many factors are happening in real time such as volatile markets. Combine that with exorbitant fees and the tax man (who will take up to 50%) and the world can be a pretty scary place.

So how do most invest?

They use a financial adviser. He recommends how to invest there funds in there 401K and other investments.

Is this wise? Financial Advisers earn their money from commissions on what they sell. So like any good salesman they will sell you what pays them the most money as opposed to what makes you the most money.

Mutual funds also advertise whet the made. So let’s say that they made a 10% for the year. Is that what you get? No!!

Forbes Magazine did a study of the costs of mutual funds. They found that on average the following fees are subtracted:

"Cost Summary

The following summarizes the average quantifiable costs described. Adviser and soft dollar costs are excluded due to the large range in advisory fees and the difficulty of quantifying soft dollar costs. When working with a financial adviser, it is important to add the advisory fee to the mutual fund costs listed below for an accurate depiction of total potential costs.

Non-Taxable Account	Taxable Account
Expense Ratio .90%	Expense Ratio .90%
Transaction Costs 1.44%	Transaction Costs 1.44%
Cash Drag .83%	Cash Drag .83%
–	Tax Cost 1.00%
Total Costs 3.17%	Total Costs 4.17%

Commissions to salesman about .75%"

So out of 6%  you actually get either 2% 0r 2% depending on whether you have a Taxable or a Non-Taxable account. What if the fund had a year where they did only 5% or less (you can lose money?)

Action – I strongly advise you to contact you adviser and get a full list of fees for anything you are invested in. Demand it in writing. Then move to investments with mush lower fees

We will quantify precise numbers in the next blog post

Don’t be like the fellow in the cartoon below.

As usual please send us your comments and any topics you would like to discuss. 

Also realize I am writing this to give people information to help them keep the most money they can in in their pocket. At no time to we sell any financial products or get commissions for any recommendation. This blog will be updates every Monday.