The Crushingly Expensive Mistake Killing Your Retirement

401(k) fees are costing you hundreds of thousands of dollars over your lifetime.

The sad fact is that returns aren't certain, but fees are. Now, maybe everything will go according to plan, and your 401(k) will be partying like it's 1999. Maybe the 1 percent—or more—that you're paying in fees will actually buy you market-beating returns. But probably not. You can see this in the chart to the left fromVanguard. It shows the percentage of actively managed funds that have underperformed index funds over the short and longer hauls, net of fees. Which is to say, most of them. It's hard enough for funds to beat their benchmarks over just one to three-year periods. But that gets damn near impossible the longer you go. Once you account for survivorship bias—that bad funds go bust, and disappear from the sample—almost 80 percent of actively managed funds don't beat simple index funds over 10 to 15-year periods.

DYI Comments:  It is no accident that this blog uses Vanguard as its proxy for our aggressive investment model.  Costs are a real killer for returns over the long haul and I advocate using index funds whenever possible as the first choice as most managers under perform these indexes. "The only way to "Beat an Index" is to invest in a different and significantly greater - undervalued index." 

DYI