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Hmmm, yeah, those aren't great.

One thing though, the returns of an index fund are going to be the returns of the market, minus expense ratios, give or take a little bit. So you can't look at the 5 year (or whatever year) numbers for a fund and say it's poor. If the market didn't perform well over that time frame, then your investment won't. There's no one there trying to do well for you, they're just matching the market.

Unless the returns are distinctly worse than that of comparable index funds (in which case they're doing something wrong), returns of individual funds are less important than just picking some funds that cover different areas of the market.

Btw, to format a message use the "pre" HTML tag. Less than, "pre", greater than. An then, when your formatted area is done, less than, /, "pre", greater than. I wrote it out to avoid the system formatting it. Hopefully since you're a tech guy you know what I mean.


Aright, so you're already maxing a Roth and you know want to know whether to invest in this relatively expensive index funds or if you're better off in a taxable account. Well, there's some decent math you could do there, or you could be thankful that someone already did it for you :). Meet the 401k shaft detector - http://www.retireearlyhomepage.com/401ksft.html

It's an excel spreadsheet. You fill in your salary, your yearly salary increase, your percent of salary sent to the 401K or a txable account, your expense ratios, some tax assumptions and return assumptions, and you can see what you would have left at the end for various types of account (401k, taxable, variable annuities). Entering it some numbers that seem reasonably appropriate to you, I do show you coming out a decent bit better with the 401k benefit instead of the taxable account. But only you know your numbers and try different scenarios and see how it changes things.

Also make sure you know if your plan takes out any fees on its own, other than the fund fees.

Also keep in mind that if you leave this job early, you can roll this money over to a traditional 401k and then pick more reasonably priced funds, so this case if only if you keep it in there for a long time. If you move it out quicker, you're better off.


Finally, I'll mention that you can be a force for change in your company. Get your coworkers, and heck, your bosses together and explain to them why the current 401k plan is a rip off. Show that index funds are often 0.05 to 0.3% and that 1.2 to 1.5% is a significant ripoff. 1% difference doesn't sound like a lot, say that over 25 years, that's 25% of your investment money gone that could have been yours. Be a force for a better plan. People have done it before and so can you.
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