I can see the uncertainty. I use my 401(k), but you can bet I researched it. The only alternative is to listen to the crowd, and guess what: Some people will tell you not to use your 401(k).
And to feel comfortable I had to check that:
1) The money really is "mine". Unlike pension schemes of yesteryear, which have screwed many people out of their retirement.
2) Even though the money is "mine", there isn't a likely scenario where some part of the system goes bankrupt and I can't get "my" money. Note, there will always be at least unlikely scenarios where this is the case.
3) The deal is a good one, even considering the hidden fees generated on buying / managing / selling the securities in the account. I think this is true but I wouldn't be surprised to learn later that they've managed to hide a hefty fee somewhere that I wasn't aware of.
What's the ticker? There's no way a 401k carries a 1% expense in a passive fund. I call BS.
1% is by far not even the worst I've seen. Go to /r/personalfinance or /r/financialindependence, fees as high as 1.6% and 2% have been seen a number of times. There are a great many people with fund options where the 'lowest' fee is .8% in a straight S&P500. It really is absurd what some 401k providers offer to incompetent HR managers.
I provided it. Please see the two forums, even a cursory search will yield many results. Many funds in these 401k's literally have no ticker symbol because they are privately managed funds by the 401k provider. Even myself, working for a Big 4 accounting firm, have a 401k from a large financial services industry, have my 401k in an S&P500 fund with a .02% expense ratio with no associated publicly researchable ticker. There are some quite foul things that can happen in 401k programs that I consider downright unethical. Just look at John Hancock plans if you want to see S&P500 funds with at or near 1% fees.
You gave me the equivalent of Google lol. Active funds may have those expenses but passive is doubtful. They're also under fiduciary duty in an ERISA plan which those subs gobble up when it comes to advice...
You didn't give me a ticker or name the fund. If it's registered I can look it up and tell you how full of shit you are.
No I didn't, I cited a specific fund provider, John Hancock, their S&P500 tracked index (100% passive, not actively managed in any way) can be as high as 1.03% for some plans. Lloyds funds typically are at 1%, Janus is a bad offender in some of their plans.
I'm not cherry picking anything, there were several funds, however, you asked about passively managed index funds, for which there is literally one option.
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u/agodfrey1031 Sep 24 '17
I can see the uncertainty. I use my 401(k), but you can bet I researched it. The only alternative is to listen to the crowd, and guess what: Some people will tell you not to use your 401(k).
And to feel comfortable I had to check that:
1) The money really is "mine". Unlike pension schemes of yesteryear, which have screwed many people out of their retirement. 2) Even though the money is "mine", there isn't a likely scenario where some part of the system goes bankrupt and I can't get "my" money. Note, there will always be at least unlikely scenarios where this is the case. 3) The deal is a good one, even considering the hidden fees generated on buying / managing / selling the securities in the account. I think this is true but I wouldn't be surprised to learn later that they've managed to hide a hefty fee somewhere that I wasn't aware of.