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URL:  http://boards.fool.com/wolfman225-asks-this-talk-of-high-fees-in-401k-29796179.aspx

Subject:  Re: Secrets of the 0.2% Date:  1/22/2012  4:39 PM
Author:  intercst Number:  69964 of 75836

wolfman225 asks,

This talk of high fees in 401k plan fund selections has me a little confused. In making my selections, I tried to keep in mind the Fool's advice of keeping any fees/transaction costs under 2%. Should I aim lower than that? My 401k, while new, has done relatively well (at least for this first year), considering all of the volatility. Here's a breakdown of expense ratios

Vanguard Total Stock Market Index........... 0.07%
MainStay Large Cap Growth................... 1.04%
Perkins Mid Cap Value....................... 0.83%
Select Mid Cap Growth (TRP/Frontier)........ 0.86%
Selec Sm Cap Growth Eq (W&R/Wellington)..... 0.99%
Euro-Pacific Growth......................... 0.85%

Each of these is the lowest in expenses of those available in my plan for each sector. The only real dog I have right now is the Euro-Pacific Growth fund (my smallest holding, @ 5%). Unsurprising, given the events in Europe.

Would any of you say that these expenses are out of line?

</snip>


The average person is paying too much in fees.

I'd compare your overall return vs. putting 100% in the Vanguard Total Stock Market Index. If those other funds on your list have high portfolio turnover, the hidden costs could easily double the 0.83% to 1.04% expense ratio. The hidden costs for the Vanguard fund are only 0.022%

Here's an article I wrote a while back that explains the issue.

http://retireearlyhomepage.com/four_percent.html

intercst
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