Wall Street Is Gobbling Up Two-Thirds of Your 401(k)

Post by conjecTech » Mon, Apr 29, 2013, 6:28 AM UTC

unclebucknasty wrote: post #30

conjecTech wrote: post #6

This is fundamentally wrong. The statement assumes the whole of the management fees is being reinvested at 7%, when in reality it is being used by those who have jobs in the financial sector to pay their bills. That is quite literally like taking the price you pay for anything and multiplying it by (1.07)*50 (which is ~30) and claiming that is what they are actually charging you, since you could have otherwise invest…

The salient point is that if there were no fees, then all of that money would be yours. Whether Wall Street and/or its employees actually use the cash to "pay their bills" or invest over that same period to fully realize their portion of the return is irrelevant. For that matter, Wall Street could (and probably would) invest that money elsewhere and may gain an even higher return. But, again, that's not the point. Th…

Post by hkmurakami » Mon, Apr 29, 2013, 7:04 AM UTC

AjithAntony wrote: post #90

p1mrx wrote: post #86

Earlier quoted context omitted.

ETFs are different, not strictly better. Given an ETF and mutual fund with the same expense ratio, the choice is simply a matter of preference. An ETF allows you to buy/sell at any time throughout the day, while a mutual fund lets you buy fractional shares, and make atomic transfers to other funds. ETFs have a bid/ask spread, while mutual funds trade at the day's closing price. If you do frequent trading, then ETFs a…

It may depend on the funds, but for both the fidelity and vanguard index funds, there are no transaction fees to buy (at least in an IRA in their respective accounts). If I were to make the same periodic investments via ETF, then I'd be paying a commission on each purchase.

Post by greedo » Mon, Apr 29, 2013, 1:14 PM UTC

rayiner wrote: post #21

chubot wrote: post #19

Earlier quoted context omitted.

Now, in the long run, your typical investor is going to get the same return with active management with 2% fees as he does with an index fund at 0.1% fees. How? Are you claiming that active management actually works? You might be able to beat an index fund with active management, but you also might lose big. It's an illusion. Without foresight, you're just as likely to have chosen Warren Buffet as Bernie Madoff to ma…

Corrected. I meant you'll get the same return before paying management fees.

Post by rayiner » Mon, Apr 29, 2013, 1:59 PM UTC

tptacek wrote: post #89

rayiner wrote: post #79

Earlier quoted context omitted.

> "Business" in general seems to be bimodal in making money from (a) providing value to sophisticated players, or (b) gouging the unsophisticated players (long tailing it) with a shitty product. This is much of the consumer products/services industry these days. See, e.g., Applebee's.

What does the sophisticated Applebee's customer buy?

Post by danielweber » Mon, Apr 29, 2013, 2:25 PM UTC

joe_bleau wrote: post #35

rayiner wrote: post #9

Earlier quoted context omitted.

Who doesn't have the option to invest in low fee funds? That's really your employers fault.

Any recommendations for who my employer should be using that would allow us to invest in low fee funds? We're really small, so most people have told me we just don't have the leverage to negotiate a better plan.