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Indexed Funds Often Beat Managed Funds


401k examinatiionOnly about 20% of managed 401(k) funds deliver better returns than those that are simply indexed to broader market performance, according to research conducted by the Vanguard mutual fund investment company. The problem: Managed funds charge such hefty fees that they cancel out substantial investment gains. The typical managed-fund fee is 1.3%. The lowest-cost indexed funds charge fees of just 0.08%. That 1.22% annual difference can cost $159,000 in lifetime earnings for a worker who invests $3,000 per year in a managed 401(k) from age 25 to 65.The take-away for HR: Work with your retirement benefits advisor to ensure 401(k) investment options include a variety of indexed funds.

via Most indexed 401ks beat managed funds — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily.

BERK Takeaway

Many of my newest clients come to me with 401(k)s from old jobs sitting in the old company’s plan. Some clients have forgotten about these entirely. Others have no idea how to invest their existing 401(k)s.

Here’s a simple tip…Own index funds made up of stocks of great companies…get stock exposure at the lowest cost and add that to the resource section of your investment plan. Contact me at or 732-800-2375 to get started today.