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Why Investment Fees Matter


Case study summary:
The added money in your pocket for choosing low cost investment products:

+ $48,278 over 10 years
+ $155,694 over 20 years

Do I have your attention yet? 
So, let’s say you retire in June and invest your $200,000 PSERS lump-sum rollover money in an investment product and the annual product fees are 2%/yr – a common low average for many annuity and mutual fund wrap products sold by 403(b) reps in the schools.  At a modest 6% gross return (4% net of fees), you would have $298,358 at the end of 10 years.  At the end of 20 years, you would have $445,089.

Or, let’s say you invest in low cost ETF’s (index funds) through a fee-only advisor and the annual operating expense charges are .50%/yr.  At the end of 10 years at a 6% gross return (5.5%% net of fees) your lump-sum would be worth $346,636.  At the end of 20 years, you would have $600,783.
Wouldn’t you rather have the $48,278 (additional over 10 years) or $155,694 (additional over 20 years) in your pocket rather than in the pockets of the insurance company selling you that annuity or expensive wrap product?  You can take a $7,784 trip each year for the next 20 years with that money!
You have a choice in the matter at retirement about where you put your money!  Be sure to look outside the “system” for a fee-only advisor – we have your back!

Plan to attend one of our upcoming retirement planning workshops for more insightful information – click here for more information.



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