Your Large Company Index Fund, it costs 21 basis points (.21%). Vanguard or Schwab only charge 6 basis points. What you're charging is way too much.
I told her that I sympathized with her unhappiness, but that the Plan had to collect enough fees to administer the investments, so what could we do?
She understood the problem, but still wished it were otherwise.
Well, so did I. Because broad-based, low-cost index funds will make you the most money over time. And the three-fund portfolio -- Total (U.S.) Stock Market Index, Total International Stock Market Index, and Total Bond Market Index in combination will earn dandy returns.
Who says so? These people: ...
American Association of Individual Investors: "It should come as no surprise that behavioral finance research makes a strong case for buying and holding low-cost, broadly diversified index funds."
Mark Balasa, CPA, CFP: "That three-pronged approach is going to beat the vast majority of the individual stock and bond portfolio that most people have at brokerage firms. There is a certain elegance in the simplicity of it."
Christine Benz, Morningstar Director of Personal Finance: "A single, broadly based index fund can give you exposure to the whole stock or bond market, enabling you to build an entire portfolio with just one or two funds."
Bill Bernstein, author, adviser: "Does this (three fund) portfolio seem overly simplistic, even amateurish? Get over it. Over the next few decades, the overwhelming majority of all professional investors will not be able to beat it."
Jack Bogle: "The beauty of owning the market is that you eliminate individual stock risk, you eliminate market sector risk, and you eliminate manager risk. -- The ideal portfolio would combine Vanguard Total Stock Market Index and Vanguard Total Bond Market Index with a splash of Vanguard Total International Stock Market Index if you must."
Warren Buffett: "Most investors, both institutional and individual, will find that the best way to own common stocks is through in index fund that charges minimal fees."
I bring the cost thing up because the TAG 401(k) Plan trustees have been wrestling with the issue, and one month ago voted to ratchet the Plan's fund fees down.
As of July 1st, these funds will be less expensive:
TAG 401(k) Fund Fees: Old Costs ---> New Costs
(Northern Trust) S & P 500 Index -- .21% ---> .08%
Select Mid Cap Growth -- .86% ---> .74%
PIMCO Total Return -- .68% ---> .41%
The TAG 401(k) Plan still has expenses, and the trustees don't know if the lower cash flow to the administrator will cover the Plan's total nut.
(If not, then expenses will come from Plan assets on a pro rata basis. The goal, however, is to keep Plan costs as low as possible.)
TAG 401(k) Plan Enrollment Meetings
Sony Pictures Animation -- Tuesday, June 4th, 2p.m., North -- Rm 2050
Fox TV Animation -- Wed, June 5th, 2 p.m. -- Main Conference Rm