

The Retirement Gamble - 127001brewer
http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/

======
127001brewer
The discussion about fees is extremely important and the following is a
sample:

 _Those are the fees that they charge.

Fees, expenses, portfolio turnover inside of the fund, sales loads, advisory
fees, operating expenses — take them all out, and the net return divided up by
investors is what’s left. So costs are a crucial part of the equation.

And a lot of people say, “So what?” Well, think about this. We’re lucky enough
to get a 7 percent return on the market. That means it should not surprise
anybody that investors as a group divide up 7 percent. Suppose it costs two
percent — maybe a little bit high but in the ballpark — to gain that return.
Then investors who grossed 7 percent will net 5 percent.

Now, when the market’s going up, as it did in the ’80s and ’90s, at 17 percent
a year, 2 percent doesn’t seem like much. But it’s an awful lot. And if you
compound a 7 percent and the 5 percent return over, say, 50 years, let’s call
that an investment lifetime — well, in fact the investment lifetime is longer
than that — something like 70 percent of the market return goes to the
purveyors of the services, Wall Street if you will, and 30 percent goes to the
fund owners.

So it’s greatly underrated, in part because we’re all so short-term-focused.
We don’t think about investing for a lifetime._ [1]

Again, as an example, over the lifetime of your investment, a 2% fee will
consume about 70% of it. (And most companies do not offer no- or very-low-fee
funds in their retirement offerings.)

[1] [http://www.pbs.org/wgbh/pages/frontline/business-economy-
fin...](http://www.pbs.org/wgbh/pages/frontline/business-economy-financial-
crisis/retirement-gamble/john-bogle-the-train-wreck-awaiting-american-
retirement/)

