Update: I switched from a high-fee target date fund to building my own simple three-fund portfolio

For years, I just threw money into the target date fund my 401k offered. The statement said it had a 0.75% fee, which I didn't think much about. After reading a basic book on index funds, I did the math on what that fee would cost over 30 years. It was shocking. Last quarter, I moved everything. I built a simple mix with a total US stock fund, an international fund, and a bond fund. The combined fee is under 0.10%. The difference in my quarterly statement is already noticeable, and the control I have feels way better. I wish I'd done this a decade ago. Has anyone else made a similar switch and noticed a real difference in their growth?

3 comments

3 Comments

river_rivera451mo ago

Wait, you were paying 0.75% for a target date fund? That's crazy high, no wonder the change was so big. Good on you for finally making the switch.

spencerm521mo ago

My old 401k was bleeding me dry with that fee.

miles82526d ago

And on top of that @spencerm52, that 0.75% doesn't sound like much when you first look at it but over 20 or 30 years it's basically robbing your retirement blind. I ran the numbers on mine once and it was something like $60,000 lost to fees alone by the time I retire. That's a whole new truck or a couple years of vacations just gone into some financial company's pocket for doing almost nothing. People don't realize how much those small percentages add up because it's taken out before you ever see the money. It's like a slow leak in your tire, you don't notice it until the thing is flat on the side of the road. Good call making the switch, seriously.