BOSTON (AP) — It's easy to overlook what's important when it comes to saving money. Many people would sooner clip a toothpaste coupon than review their retirement accounts to assess whether they can minimize investment fees.
Consider the potential savings from choosing low-cost investments and having the good fortune to participate in a 401(k) plan that charges relatively low administrative fees.
Let's say you have $20,000 in a retirement account. If you assume you can earn a net return of 6.5 percent a year — 7 percent from investment gains, minus a relatively modest 0.5 percent in fees and charges to run the plan — the account would grow to $70,500 in 20 years. Boost the fees to 1.5 percent, and the account will grow to just $58,400. That's $12,100 less because of a percentage point difference in fees and charges.
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