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Watching Fees on 401(k)s and Mutual Funds

The Duluth News Tribune cautions on fees on 401(k)s and mutual funds in this article. The author advises, "Pay close attention to fees. They can range from a very low 0.12 percent to a very high 2 percent, according to Hewitt Associates LLC, a benefits consulting firm. For example, if a person had $100,000 in a 401(k), and her fees were 1.5 percent, she would have about $286,160 in 17 years if her investments were averaging an 8 percent annual return. But if she was able to pay 0.5 percent in fees, she would have $339,770. Try your calculation at www.sec.gov/investor/tools/mfcc/about-costs.htm." Also, "If the expense ratio is more than 1.4 percent, you are probably wasting money. About 1 percent would be better, and less than that would be best. Studies show cheaper funds actually perform better than those that charge you high fees."