7 Signs Your 401(k) Is Quietly Underperforming
View original at finance.yahoo.com7 Signs Your 401(k) Is Quietly Underperforming Quick Read iShares Core S&P 500 ETF (IVV) charges an expense ratio of 0.03%, the benchmark for low-cost index investing, while many 401(k) plans offer index-style funds charging over 0.5%—a gap that compounds into six-figure losses on a $500,000 balance over 20 years…
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Staying in a low-yielding default option while equity markets compound is one of the most expensive passive decisions a retirement saver can make
60% confidenceMany 401(k) plans offer index-style funds charging over 0.5%, a gap that compounds into six-figure losses on a $500,000 balance over 20 years compared to iShares Core S&P 500 ETF's 0.03% expense ratio
60% confidenceTarget-date funds from high-fee providers charge 0.6% to 0.8% annually compared to under 0.15% for low-cost alternatives
60% confidenceA $100,000 investment at a 7% gross annual return can grow substantially over 20 years at near-zero fees, while a 1% expense ratio meaningfully reduces that outcome
60% confidenceActively managed funds charge more and, over long periods, most underperform their benchmark indexes after fees
60% confidenceMost 401(k) account holders unknowingly lose wealth through structural problems like excessive fees, concentrated employer stock positions above 10%, drift from target allocations, and failure to rebalance—costing participants tens of thousands in foregone compounding
60% confidence
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| Board of Governors of the Federal Reserve System · federal funds rate | 3.75 percent |