WEBVTT - Fees Will Kill Your Retirement Savings #091 0:00:00.120 --> 0:00:03.200 Welcome to How the Money. I'm Joel, I'm Matt, and 0:00:03.240 --> 0:00:06.720 today we're discussing how fees will kill your retirement savings. 0:00:25.760 --> 0:00:30.440 That's right, Joel, my Norwegian hill host. I'm Padre. We're 0:00:30.440 --> 0:00:33.599 talking about investing fees, right, fees associated with investing. We're 0:00:33.600 --> 0:00:35.920 gonna talk about the different types of fees, how to 0:00:36.000 --> 0:00:38.880 look for those, uh, and then where to go where 0:00:38.880 --> 0:00:41.240 you can keep those fees. Loo. I think last week 0:00:41.360 --> 0:00:44.400 on an episode, Matt, you said that I had an 0:00:44.440 --> 0:00:46.840 interesting kind of gravelly voice because I was slightly under 0:00:46.880 --> 0:00:49.319 the weather. Oh yeah, I do recall, all right, So 0:00:49.440 --> 0:00:53.319 it turned out we did have sickness ravaging R ended 0:00:53.360 --> 0:00:55.800 up being pretty rough. Yea. So my girls they both 0:00:55.800 --> 0:00:58.200 had strap throat and then on top of it, my 0:00:58.320 --> 0:01:00.560 three year old had the flu as well. So kind 0:01:00.560 --> 0:01:03.920 of like double dose of terrible sickness going through and 0:01:03.960 --> 0:01:05.360 so I'm sure I caught a touch of that and 0:01:05.400 --> 0:01:07.600 my voice was a little bit off. Um, but I 0:01:07.640 --> 0:01:09.800 want you guys get the flu shot. I got the 0:01:09.800 --> 0:01:12.000 flu shot, but I because I get it for free 0:01:12.000 --> 0:01:13.520 of work, and I don't think the rest of my 0:01:13.560 --> 0:01:16.720 family did. And I probably should have like drugged them 0:01:16.720 --> 0:01:18.920 into a Kroger or something like that in order to 0:01:18.959 --> 0:01:20.840 get the flu shot. But we we just didn't. But 0:01:20.880 --> 0:01:22.440 at least at the end of the season. And it's 0:01:22.800 --> 0:01:24.200 too bad right now. Well, when we heard that, that 0:01:24.240 --> 0:01:26.520 was my first thought. I was like, the freaking flu crap. 0:01:26.680 --> 0:01:28.280 Did we get the flu shot? Because I figured they 0:01:28.280 --> 0:01:29.920 would have already caught it, to be honest, But I 0:01:29.959 --> 0:01:33.360 guess we nearly avoided that one because of the flu shot. 0:01:33.400 --> 0:01:35.040 I guess it was that same strain because most of 0:01:35.080 --> 0:01:37.240 the time, isn't it like slightly off, Like you get 0:01:37.240 --> 0:01:38.679 the flu shot and then it ends up being a 0:01:38.680 --> 0:01:41.720 different variety of flu that goes around. Yeah, sometimes the 0:01:41.760 --> 0:01:45.000 flu shot is only a certain percentage effective because they 0:01:45.000 --> 0:01:47.560 can't quite accurately predict the strains that are going to 0:01:47.800 --> 0:01:49.200 have to guess which he is going to be the 0:01:49.200 --> 0:01:52.080 one that yeah, the ones that's popular exactly exactly, Oh 0:01:52.120 --> 0:01:54.120 you're the cool string this year. But I wanted to 0:01:54.160 --> 0:01:56.160 mention to people in the case of strep throat, at 0:01:56.240 --> 0:01:58.200 least when we went to the doctor, we were able 0:01:58.240 --> 0:01:59.800 to you know, we got a prescription friend of my 0:01:59.800 --> 0:02:02.400 honor to fight the strip throat, And I wanted to 0:02:02.480 --> 0:02:05.480 let folks know about free and cheap medications, and in particular, 0:02:05.560 --> 0:02:09.400 there are certain places that offer much cheaper basic medication 0:02:09.440 --> 0:02:12.120 than others. And if you, uh, if you have a 0:02:12.160 --> 0:02:15.800 Publix near you, they're kind of the Southeast Regional grocery chain. 0:02:15.960 --> 0:02:18.800 You can get free antibiotics, which is really nice. So 0:02:18.840 --> 0:02:21.919 both girls were able to load up on antibotics for free. Yeah, Julian, 0:02:21.919 --> 0:02:24.400 you can get those antibotics all the time, right, It's 0:02:24.440 --> 0:02:26.880 not like it was just a special promotion that they're running. 0:02:27.040 --> 0:02:29.000 I mean they you can go there pretty much anytime 0:02:29.080 --> 0:02:31.440 get the antibotics you need. And you can get pet 0:02:31.440 --> 0:02:34.000 antibiotics there for free as well, so not just human 0:02:34.040 --> 0:02:36.840 stuff but stuff for your your your dogs. Yeah, so 0:02:36.840 --> 0:02:39.600 that's really cool. And there are lists online and we'll 0:02:39.639 --> 0:02:41.520 link to one of kind of where you can find 0:02:41.600 --> 0:02:45.400 cheap and and free prescriptions, like I know, Walmart has 0:02:45.440 --> 0:02:48.720 a four dollar list of prescriptions that they make available 0:02:49.080 --> 0:02:51.920 for for four dollars. And then you know, there's also 0:02:52.080 --> 0:02:54.840 a great app that you can use called good r 0:02:55.080 --> 0:02:57.480 X and you plug in the prescription that you want 0:02:57.520 --> 0:03:00.800 to find, and it essentially maps out your town and 0:03:00.840 --> 0:03:03.280 it says, well, it's eight dollars here and it's thirty 0:03:03.280 --> 0:03:06.440 two dollars here. You'll be amazed at the disparity in prices. 0:03:06.440 --> 0:03:08.640 So if you're loyal to one place to get your 0:03:08.680 --> 0:03:11.799 prescriptions filled, then in all likelihood you're paying too much. 0:03:12.120 --> 0:03:14.959 The only caveat is if you're getting your prescriptions filled 0:03:15.000 --> 0:03:17.520 at Costco, you're probably getting the lowest price almost every time. 0:03:17.800 --> 0:03:20.480 If that's where you're getting your prescriptions filled. Nice. The 0:03:20.480 --> 0:03:22.520 only other trick then if you're gonna do publics is 0:03:22.560 --> 0:03:24.000 to make sure that you don't end up kind of 0:03:24.240 --> 0:03:26.640 shopping around a little bit because your prescription is not filled. 0:03:27.160 --> 0:03:29.960 Because they're one of like the nicer grocery stores around us, right, 0:03:30.080 --> 0:03:32.160 they're a lot nicer than Aldi. Uh. I know that 0:03:32.200 --> 0:03:33.720 you can't get the same deals they got, all those 0:03:33.880 --> 0:03:36.400 buy one, get one deals, But as far as the 0:03:36.400 --> 0:03:38.520 the general stuff that we normally get, we've got suckered 0:03:38.560 --> 0:03:40.480 into kind of walk in the aisles a little bit 0:03:40.520 --> 0:03:43.200 because it hadn't quite unfilled. And I don't know, maybe 0:03:43.200 --> 0:03:45.080 we spent a little more money on groceries than we 0:03:45.080 --> 0:03:47.800 would have, but hey, we got the free antibiotics, so yeah, yeah, 0:03:47.840 --> 0:03:49.920 you're gonna pay a little more for groceries at publics. 0:03:49.920 --> 0:03:52.160 But uh, it is truly a nice place to shop, 0:03:52.200 --> 0:03:54.520 that's for sure. Um. All right, so let's get to 0:03:54.520 --> 0:03:56.720 the beer that we're having on the show real quick, Matt. 0:03:56.760 --> 0:03:59.920 Today we're drinking Mint to Guard. It's a beer to 0:04:00.000 --> 0:04:03.960 Guard agent red Wine Barrels from Brain Dead Brewing Company. Yeah, 0:04:04.000 --> 0:04:05.600 this one was sent to us by Jared. He sent 0:04:05.720 --> 0:04:08.680 us a several beers a couple of months ago. We 0:04:08.760 --> 0:04:11.360 had a Jester king on that you are a huge 0:04:11.360 --> 0:04:13.440 fan of Yeah, I fell in love with it, all right. 0:04:13.440 --> 0:04:15.600 So we'll get into our thoughts on this beer at 0:04:15.600 --> 0:04:17.520 the end of the show. But now, Matt, onto the 0:04:17.560 --> 0:04:20.240 topic of hand. We're talking about why fees are a 0:04:20.279 --> 0:04:23.960 retirement savings killer. And just a fee of like one 0:04:24.000 --> 0:04:27.840 percent in your retirement account that doesn't sound all that bad. 0:04:27.920 --> 0:04:31.560 One percent, right, Like that's that's almost negligible, it seems like, 0:04:31.920 --> 0:04:33.840 But it turns out that a fee of even just 0:04:33.880 --> 0:04:37.000 one percent could cost you, potentially depending on how much 0:04:37.000 --> 0:04:40.159 you're investing, over half a million dollars in actual money 0:04:40.240 --> 0:04:43.360 back to you over your investing lifetime. Fees not only 0:04:43.400 --> 0:04:45.360 a road how much money you have to invest now, 0:04:45.400 --> 0:04:47.640 but they've lessened the amount of money that's compounding in 0:04:47.720 --> 0:04:50.599 your account for all of the years that you're saving 0:04:50.600 --> 0:04:53.120 and investing. And it turns out that almost three quarters 0:04:53.120 --> 0:04:55.600 of folks have no idea what sort of fees are 0:04:55.640 --> 0:04:58.320 being charged inside of their investment accounts. And we have 0:04:58.360 --> 0:05:00.800 to change that, Matt. So let's putting up the subject 0:05:00.800 --> 0:05:02.760 of fees. Let's kind of get into it and help 0:05:02.800 --> 0:05:04.880 people learn what sort of fees are they're paying currently 0:05:04.920 --> 0:05:07.800 and then how to avoid them schedule. Nerd Wallet actually 0:05:07.839 --> 0:05:10.000 has a fantastic article that we're gonna link to in 0:05:10.040 --> 0:05:12.320 the show notes that breaks down all of this information 0:05:12.360 --> 0:05:14.599 and they've got some very helpful charts. But we're gonna 0:05:14.600 --> 0:05:16.680 share a quick example where as an investor, if you 0:05:16.680 --> 0:05:19.839 put five dollars a month into a brokerage account each 0:05:19.920 --> 0:05:22.440 year for thirty years, so that's a total of a 0:05:22.520 --> 0:05:25.560 hundred and eighty thousand dollars right say, over your working career, 0:05:26.160 --> 0:05:29.080 and during that time, say you're earning seven percent well 0:05:29.160 --> 0:05:32.240 with a one percent fee, that entire time, the value 0:05:32.240 --> 0:05:34.400 of your account will have grown to four hundred and 0:05:34.440 --> 0:05:37.920 eighty nine thousand dollars roughly. But get this, man, you 0:05:37.960 --> 0:05:42.159 would have lost nine eight thousand dollars to fees close 0:05:42.200 --> 0:05:44.799 to a hundred k just because of that one percent feet, 0:05:44.800 --> 0:05:47.400 which is massive. Yeah, that's messed up, man. And it 0:05:47.480 --> 0:05:49.400 just goes to show you that even and if the 0:05:49.400 --> 0:05:51.960 fees are higher, some people might be looking at like 0:05:52.040 --> 0:05:54.480 a one and a half or two percent feet And 0:05:54.600 --> 0:05:56.760 if that's the case, over your thirty year investing lifetime, 0:05:56.800 --> 0:05:59.600 you're talking about almost a hundred and eighty thousand dollars 0:05:59.680 --> 0:06:02.200 on a two percent fee. So fees matter greatly. And 0:06:02.200 --> 0:06:03.800 it is something that I think we're becoming a little 0:06:03.839 --> 0:06:06.720 bit more aware of, something that's talked about more and 0:06:06.760 --> 0:06:09.760 that's partly in thanks to the bigger low cost investment 0:06:09.800 --> 0:06:13.480 houses like Vanguard, Fidelity and Schwab. But you just don't 0:06:13.520 --> 0:06:16.880 want to end up in retirement with less money than 0:06:16.960 --> 0:06:20.720 you could have because fees were eating away at it. Yeah. 0:06:20.760 --> 0:06:22.599 The problem is too is it's just not something you 0:06:22.640 --> 0:06:24.400 think about, right, Like you don't look down the road 0:06:24.440 --> 0:06:26.640 and think, cool, how much less money am I gonna 0:06:26.680 --> 0:06:29.760 have because I'm not investing maybe quite as wisely or 0:06:29.800 --> 0:06:31.400 in the funds that I should be. I think a 0:06:31.440 --> 0:06:33.160 lot of times folks think, oh, I'm putting a lot 0:06:33.200 --> 0:06:35.080 of money away it's gonna be okay, right, Like I 0:06:35.080 --> 0:06:38.160 can sort of outsafe and out invests when I'm paying 0:06:38.160 --> 0:06:41.080 and fees, but you're still gonna lose that money if 0:06:41.120 --> 0:06:43.480 you have high fees. And again a small fee doesn't 0:06:43.480 --> 0:06:45.839 seem like a huge deal, but they are the biggest 0:06:45.839 --> 0:06:49.040 problem and a huge differentiator with how much wealth you 0:06:49.040 --> 0:06:51.839 will actually have when you do reach retirement, of course, 0:06:51.880 --> 0:06:54.440 all other factors being equal. Yeah, Matt. So there's this 0:06:54.480 --> 0:06:57.440 company called morning Star, and what they do is they 0:06:57.440 --> 0:07:00.599 track and rank different funds according to their performance. And 0:07:00.640 --> 0:07:02.400 they did a study a few years ago. They have 0:07:02.480 --> 0:07:05.520 these morning Star, these vaunted morning Star ratings, and it's 0:07:05.520 --> 0:07:08.600 a star system and they found out, according to their study, 0:07:08.640 --> 0:07:12.520 that the costs associated with a fund is actually more 0:07:12.600 --> 0:07:16.240 important than having a higher morning Star Star rating had 0:07:16.240 --> 0:07:19.160 a larger impact on how successful that fund was and 0:07:19.160 --> 0:07:22.000 on investor return. So, if you're looking to invest in 0:07:22.000 --> 0:07:24.520 the stock market and you're looking at the morning Star 0:07:24.640 --> 0:07:26.600 Star system, which you should, I mean, I think morning 0:07:26.600 --> 0:07:28.600 Star is helpful. I think they rank funds. Well, should 0:07:28.600 --> 0:07:31.520 you just say morning Star system? You probably should? Yeah, yeah, 0:07:31.560 --> 0:07:33.120 I just get it out quickly. But I just thought 0:07:33.120 --> 0:07:36.080 that was interesting that they basically said that fees are 0:07:36.080 --> 0:07:39.160 more important than the star system that they have so 0:07:39.280 --> 0:07:41.640 much invested in, so much tied up in. And so 0:07:41.720 --> 0:07:43.600 I think morning Star is, you know, a great place 0:07:43.640 --> 0:07:47.000 to research funds, but fees and those matter more than 0:07:47.160 --> 0:07:49.120 than even the star rating. And so that's something that 0:07:49.160 --> 0:07:51.720 many people found shocking when that study was released. And 0:07:51.760 --> 0:07:55.240 I just think it's something that just quantifies exactly how important, 0:07:55.400 --> 0:07:58.360 you know, fees are too individual mom and pop investors 0:07:58.360 --> 0:07:59.880 like us and like you know, people listening to this 0:08:00.000 --> 0:08:02.520 show that that want to just invest inside of their 0:08:02.560 --> 0:08:04.920 four O and K I A. It only accentuates the 0:08:04.920 --> 0:08:07.080 fact that they should be paying even more close attention 0:08:07.120 --> 0:08:09.840 to to the fees that are inside of those investments. Yeah, Joel, 0:08:09.840 --> 0:08:11.760 But the good news, like you're you're saying though, is 0:08:11.800 --> 0:08:14.840 that fees are in decline as low cost brokerage firms, 0:08:15.200 --> 0:08:18.320 they've gotten more popular, they've gained prominence, uh, and they 0:08:18.360 --> 0:08:22.160 are wanting investors to know more and specifically it's it's 0:08:22.160 --> 0:08:23.520 sort of like a race to the bottom as far 0:08:23.560 --> 0:08:25.040 as like what the fees are going to be with 0:08:25.080 --> 0:08:27.760 the different big brokera ch Hosses, I think of Vanguard 0:08:27.800 --> 0:08:31.400 and Fidelity, they're essentially anytime they release something new, it's 0:08:31.440 --> 0:08:33.839 to compete with a specific product. That's like rock and 0:08:33.920 --> 0:08:36.680 socking robots constantly right now between the two of them exactly. 0:08:36.720 --> 0:08:39.800 And most recently, I guess was last year Fidelity they 0:08:39.920 --> 0:08:43.360 dropped the expense ratios on a certain line of funds 0:08:43.600 --> 0:08:46.800 down to zero, like completely zero, where there is no 0:08:47.000 --> 0:08:50.360 cost associated with maintaining those funds at all. So after 0:08:50.400 --> 0:08:52.080 the break, we're gonna talk about the different types of 0:08:52.080 --> 0:08:55.080 fees associated with investing, as well as how to find 0:08:55.120 --> 0:08:57.880 those fees that are hiding in your investments. Stick around 0:08:57.880 --> 0:09:08.920 for that, all right, Matt, we're back from the break 0:09:09.080 --> 0:09:11.319 and let's get into the types of fees. But before 0:09:11.360 --> 0:09:13.000 we get to that, I didn't want to just say, 0:09:13.040 --> 0:09:15.120 just to give a little bit more of a mental picture. 0:09:15.440 --> 0:09:18.960 When I think about fees, I think of termites. And 0:09:19.080 --> 0:09:22.160 it turns out that termites can be eating away at 0:09:22.240 --> 0:09:25.640 the wood in your house for years before you even 0:09:25.640 --> 0:09:28.080 notice that they're there, before you notice that they're having 0:09:28.120 --> 0:09:29.800 an impact, and all of a sudden, you know, your 0:09:29.800 --> 0:09:32.560 foot goes through the floorboard and it's like boom. Instantly 0:09:32.559 --> 0:09:34.240 you know the you have a problem and that the 0:09:34.320 --> 0:09:36.839 termites are are eating through your house and you've got 0:09:36.840 --> 0:09:39.160 to get an exterminator out there. And fees can be 0:09:39.200 --> 0:09:41.480 like that. They can be kind of this silent killer 0:09:41.720 --> 0:09:44.319 that you don't see, and that's out of sight, out 0:09:44.320 --> 0:09:46.520 of mind, and you don't even realize that it is 0:09:46.760 --> 0:09:50.200 ruining your retirement savings because of like the examples we 0:09:50.240 --> 0:09:53.160 mentioned just above, it can be costing you fifty a 0:09:53.240 --> 0:09:56.240 hundred thousand or more over the life of your investment. 0:09:56.280 --> 0:09:58.640 So let's get into the specific types of fees that 0:09:58.679 --> 0:10:00.840 are common and the and we'll talk about how to 0:10:00.840 --> 0:10:02.960 look for fees inside of your retirement account so that 0:10:03.000 --> 0:10:05.280 you can figure out how to eliminate them. Yes, Joe, 0:10:05.360 --> 0:10:07.320 let's dive into it. Just keep in mind that this 0:10:07.360 --> 0:10:09.240 is not going to be an exhaustive list where we 0:10:09.480 --> 0:10:11.400 name every single fee. We're gonna kind of cover some 0:10:11.440 --> 0:10:14.080 of the more prominent ones, some of the ones that 0:10:14.480 --> 0:10:17.439 take the biggest bite out of your investments. So on 0:10:17.440 --> 0:10:20.040 that note, let's start with brokerage fees. These are the 0:10:20.040 --> 0:10:23.440 fees charged by the broker that holds your investment accounts. 0:10:23.720 --> 0:10:25.600 We have talked about this recently, but just think of 0:10:25.640 --> 0:10:28.400 them as the custodian of that account. To take for example, 0:10:28.440 --> 0:10:31.439 of Vanguard, they have a twenty dollar a year fee, 0:10:31.480 --> 0:10:34.439 which isn't huge at all unless you meet certain investing 0:10:34.440 --> 0:10:36.679 thresholds and then they eliminate it. Yeah, or I mean, 0:10:36.720 --> 0:10:38.600 and you can meet those thresholds as well by just 0:10:38.679 --> 0:10:42.199 receiving your statements via email, so it's not difficult at all. 0:10:42.520 --> 0:10:44.960 But then you've got Fidelity as well, and they've decided 0:10:45.000 --> 0:10:47.760 that they're not going to have any fees at all. Again, 0:10:48.000 --> 0:10:49.840 Rock and Stock and robots, they're trying to take each 0:10:49.840 --> 0:10:53.440 other down. Yeah, it's actually interesting pouring over the fees 0:10:53.520 --> 0:10:55.719 like brokerage fees and and the other fees that that 0:10:55.840 --> 0:10:59.600 investment firms charge. I was looking at Vanguards and Fidelities specifically, 0:11:00.040 --> 0:11:03.280 and honestly, Fidelity is not only doing better on some 0:11:03.320 --> 0:11:06.079 of the specific fund fees now, but they're doing better 0:11:06.120 --> 0:11:10.400 on pretty much every single other fee associated with investing 0:11:10.440 --> 0:11:13.240 if you go with them. And so, yeah, Fidelity has 0:11:13.320 --> 0:11:15.800 just really picked up the pace in the last year 0:11:15.840 --> 0:11:18.520 and a half two years. And I love Vanguard. Yeah, 0:11:18.520 --> 0:11:20.240 you and I both are a huge trans vant guard, 0:11:20.400 --> 0:11:23.319 but Fidelity, man, it's like winning my heart. It's uh 0:11:23.440 --> 0:11:25.560 they're doing a really impressive thing. So those are still 0:11:25.600 --> 0:11:27.839 both just great companies with with low fees, and we'll 0:11:27.840 --> 0:11:30.320 talk more about that in a little bit. So other 0:11:30.320 --> 0:11:33.199 types of fees that you might encounter when investing is 0:11:33.320 --> 0:11:35.920 something called a load, and there can be front end loads, 0:11:35.960 --> 0:11:38.400 there can be back end loads. These are charges or 0:11:38.440 --> 0:11:41.280 commissions paid to the salesperson who sells you the fund 0:11:41.480 --> 0:11:43.280 or like a broker if you're going like going through 0:11:43.280 --> 0:11:45.559 a broker with your investments as well. Yeah, and so 0:11:45.720 --> 0:11:47.040 these are things that you need to watch out for 0:11:47.120 --> 0:11:50.000 because let's say you're putting in a thousand dollars, well, 0:11:50.120 --> 0:11:52.880 they might take out a certain percentage you're right off 0:11:52.880 --> 0:11:54.480 the front end or off the back end when you 0:11:54.480 --> 0:11:58.040 sell that investment, and and those loads can massively impact 0:11:58.160 --> 0:12:00.199 the returns that you see because that's just an other 0:12:00.200 --> 0:12:03.839 fee that's hanging out. Another fee. Trade commissions. These are 0:12:03.840 --> 0:12:06.520 the costs association with buying and selling stocks or e 0:12:06.640 --> 0:12:08.600 t f s. So if you're with a company like 0:12:08.640 --> 0:12:11.160 e Trade, the minimum that you're looking at spending with 0:12:11.240 --> 0:12:13.559 a purchase or a sale is five bucks, and that's 0:12:13.559 --> 0:12:16.160 only if you meet the threshold of something like thirty 0:12:16.320 --> 0:12:18.920 transactions per quarter or something like that, and it could 0:12:18.920 --> 0:12:21.080 be even more depending on who you're with. That is 0:12:21.120 --> 0:12:23.040 not a fee that you need to be paying when 0:12:23.040 --> 0:12:26.199 you can buy and sell for free. So just keep 0:12:26.200 --> 0:12:28.320 in mind that the more often that you buy and sell, 0:12:28.559 --> 0:12:31.240 that's gonna impact how much money you have to actually 0:12:31.280 --> 0:12:34.760 invest in actual funds or stocks. So you do not 0:12:34.920 --> 0:12:37.240 want to be buying and selling constantly, uh, and you 0:12:37.320 --> 0:12:39.840 do not want to be with a provider who charges 0:12:39.880 --> 0:12:42.840 you for trade commissions. And the most talked about type 0:12:42.840 --> 0:12:44.959 of fee now, Matt, I feel like it's expense ratios 0:12:45.040 --> 0:12:47.319 because this is where the Rockham stock on robots is 0:12:47.360 --> 0:12:50.400 hitting like full bore, and we've just seen expense ratios 0:12:50.480 --> 0:12:53.880 fall massively over the last few years. So typically, especially 0:12:53.920 --> 0:12:55.520 with the low cost providers, it's that fee that you'll 0:12:55.520 --> 0:12:58.120 see touted the most frequently, and especially with Fidelity right 0:12:58.160 --> 0:13:00.439 now because they have those zero percent funds and will 0:13:00.440 --> 0:13:02.040 link to those in the show notes. But there's a 0:13:02.040 --> 0:13:04.120 few funds in particular that they offer that don't have 0:13:04.200 --> 0:13:06.720 any expense ratio on top of not having any of 0:13:06.720 --> 0:13:08.880 these other fees that we're talking about, So really it 0:13:09.000 --> 0:13:12.320 is like you're investing for free. Yeah, it's Scott Clean 0:13:12.400 --> 0:13:16.240 costing you nothing exactly, And so expense ratios are something 0:13:16.320 --> 0:13:18.600 you want to look at. And it's really hard to 0:13:18.600 --> 0:13:20.920 say what a good expense ratio is. Now when you 0:13:20.920 --> 0:13:23.360 think about the fact that you can invest for free, 0:13:23.679 --> 0:13:27.560 it kind of makes anything else look expensive, right honestly, yeah, 0:13:27.559 --> 0:13:29.520 it does. Yeah, But I think if you're interested in 0:13:29.600 --> 0:13:33.040 funds that have an expense ratio of point to five, 0:13:33.240 --> 0:13:36.199 maybe point three oh or or less, then those are, 0:13:36.280 --> 0:13:40.000 in all likelihood funds that at least aren't runaway with fees. 0:13:40.200 --> 0:13:42.079 You want to be cognizant of your fees. But it's 0:13:42.120 --> 0:13:44.920 also okay to realize that even though fidelities offering it 0:13:44.960 --> 0:13:46.959 for free, there are a lot of other great institutions 0:13:46.960 --> 0:13:49.600 that you can do business with that don't have free 0:13:49.640 --> 0:13:52.920 expense ratios, but they do provide low cost expense ratios, 0:13:52.960 --> 0:13:55.280 and that's what you want to prioritize. And then lastly, Joe, 0:13:55.280 --> 0:13:58.480 we're gonna touch on the management fee. And typically this 0:13:58.559 --> 0:14:01.280 is an annual fee from an investment advisor that can 0:14:01.320 --> 0:14:03.360 also be from a robo advisor, like if it's not 0:14:03.400 --> 0:14:06.480 an actual human being, but if it's a person, typically 0:14:06.559 --> 0:14:10.720 they charge by the percentage of assets under management, or 0:14:10.800 --> 0:14:12.840 you know, sometimes there's a flat rate as well. But 0:14:13.320 --> 0:14:14.800 think of it. Maybe it's sort of like the cost 0:14:14.880 --> 0:14:17.079 of admission, right like just to be seen by that 0:14:17.240 --> 0:14:19.720 advisor or just to be able to use that robo advisor, 0:14:19.840 --> 0:14:22.160 there's a price you gotta pay. Sometimes it's an expense 0:14:22.240 --> 0:14:23.880 or a feed that might be worth it depending on 0:14:23.960 --> 0:14:27.120 your personal situation. Yeah, there's some great robo advisors to right, 0:14:27.160 --> 0:14:29.040 and we talked about that in a recent Listener Question 0:14:29.080 --> 0:14:32.120 episode that you know, robo advisors have a lot to offer, 0:14:32.280 --> 0:14:35.280 especially for investors that just don't feel comfortable going to 0:14:35.360 --> 0:14:37.560 d I Y route. Um. We we we like a 0:14:37.560 --> 0:14:39.880 lot of robo investors. But the thing is you're gonna 0:14:39.880 --> 0:14:41.440 pay a little bit higher of a fee. But I 0:14:41.440 --> 0:14:43.040 think you're right, like a little bit higher of a 0:14:43.080 --> 0:14:45.720 fee as long as it's not astronomical, which most robo 0:14:45.760 --> 0:14:48.560 advisors it's point to five point three oh something like that, 0:14:48.600 --> 0:14:51.560 which which is within the realm of normalcy, and and 0:14:51.600 --> 0:14:54.680 it's okay. I think those are decent options for a 0:14:54.680 --> 0:14:57.640 lot of investors. Yeah, it's just good to know that 0:14:57.680 --> 0:14:59.480 those are being taken out right, Like you need to 0:14:59.520 --> 0:15:01.320 be aware are these fees, and that's what we're gonna 0:15:01.320 --> 0:15:03.440 talk about next, actually, is how to look for those fees. 0:15:03.440 --> 0:15:05.280 And Joel, you're gonna kick that off. Yeah, we just 0:15:05.280 --> 0:15:07.560 mentioned robo advisors, but then also you might have a 0:15:07.640 --> 0:15:10.960 financial advisor down the street who who you work with, 0:15:11.240 --> 0:15:13.520 and their fees are just going to be higher than 0:15:13.760 --> 0:15:16.560 a robo advisor fees are. And their fees typically if 0:15:16.560 --> 0:15:18.360 they are a fee only advisor, are going to be 0:15:18.760 --> 0:15:21.600 a percentage of assets under management. One percent is kind 0:15:21.600 --> 0:15:23.680 of an average amount. They might charge you a flat 0:15:23.760 --> 0:15:25.960 rate to sit down with them every year. But then 0:15:26.000 --> 0:15:28.200 there are other advisors who might take advantage of you 0:15:28.280 --> 0:15:31.160 with loads and commissions and brokers fees. And so the 0:15:31.240 --> 0:15:34.200 quickest way to look out for fees in your own 0:15:34.400 --> 0:15:38.240 retirement account is to ask the question, especially if you're 0:15:38.240 --> 0:15:41.200 working with an individual who manages your assets. If you 0:15:41.240 --> 0:15:43.840 have a financial advisor, do you know how they get paid? 0:15:44.040 --> 0:15:47.320 And if you don't ask, there was a rule called 0:15:47.320 --> 0:15:49.600 the fiduciary rule that was supposed to go into place 0:15:50.000 --> 0:15:51.840 last summer and then it kind of got slapped down. 0:15:51.960 --> 0:15:54.000 So slap down by the courts. Yes, So it's a 0:15:54.080 --> 0:15:57.520 huge bummer because that is a standard that I think 0:15:57.560 --> 0:16:00.440 all investment professionals should be required to meet, which means 0:16:00.440 --> 0:16:02.520 that when they have you as a client, everything they 0:16:02.560 --> 0:16:04.720 do is in your best interest. And now they don't 0:16:04.760 --> 0:16:07.440 have to meet that standard, certain investment professionals still hold 0:16:07.480 --> 0:16:10.120 themselves to that fiduciary standard, and if they do, they 0:16:10.120 --> 0:16:12.760 will typically put that wording on their website or or 0:16:12.840 --> 0:16:14.880 let you know up front. Just make sure you ask 0:16:14.920 --> 0:16:17.720 that question, because if they are, there's a greater chance 0:16:17.880 --> 0:16:19.680 that the fees aren't going to be as outrageous and 0:16:19.680 --> 0:16:21.560 they're not gonna be as hidden. But you want to 0:16:21.600 --> 0:16:24.040 ask about the fees that you're being charged to your 0:16:24.080 --> 0:16:27.040 investment professional if you have one. So if you aren't 0:16:27.080 --> 0:16:30.200 sure what fees are are being taken out of your account, 0:16:30.560 --> 0:16:33.240 it's best to ask the question of whoever you're working with, 0:16:33.680 --> 0:16:35.440 And if you don't have a financial advisor and you 0:16:35.520 --> 0:16:38.320 just have like a four one K or an I RA, Matt, 0:16:38.360 --> 0:16:40.400 how can you figure out what fees are paying inside 0:16:40.400 --> 0:16:42.280 of you know, one of those vehicles. First of all, 0:16:42.320 --> 0:16:45.040 if you are with a big bank, or even worse, 0:16:45.160 --> 0:16:47.720 maybe if you're with an insurance company, it's likely that 0:16:47.760 --> 0:16:52.320 you are paying higher than average and potentially ridiculous fees 0:16:52.440 --> 0:16:54.960 could be catastrophic, yeah, really really bad. So what you 0:16:54.960 --> 0:16:57.120 want to do in those situations are to ask for 0:16:57.160 --> 0:16:59.840 the disclosures. And chances are I think a lot of 0:17:00.520 --> 0:17:02.720 don't actually know what their fees are because in those 0:17:02.760 --> 0:17:05.199 situations where you have your retirement or you have account 0:17:05.240 --> 0:17:08.119 set up through your work, it's it's hands off, right like, 0:17:08.160 --> 0:17:09.720 that's sort of one of the benefits is that you've 0:17:09.760 --> 0:17:12.560 got HR. That's something that they've done for you, and 0:17:13.080 --> 0:17:14.919 you think, cool, I can get back. We're all in 0:17:14.920 --> 0:17:17.320 this together, me and all the employees here. You know, 0:17:17.600 --> 0:17:19.719 we're all investing and doing what we're supposed to do. 0:17:20.119 --> 0:17:22.440 But what you may not realize is that you all 0:17:22.560 --> 0:17:25.320 might be paying way too much. So ask for that disclosure. 0:17:25.520 --> 0:17:27.480 If the fees are high, go to HR and then 0:17:27.520 --> 0:17:30.720 ask them to shop around to other providers um or 0:17:30.720 --> 0:17:33.720 at least to include lower cost index funds inside of 0:17:33.760 --> 0:17:36.359 the plan that you're offered. You can also use a 0:17:36.400 --> 0:17:39.200 site like bloom and that's actually it's spelled b l 0:17:39.359 --> 0:17:43.159 o o oh um. There's three oh three oh oh, 0:17:43.440 --> 0:17:46.200 and they can perform a free analysis of your four 0:17:46.359 --> 0:17:49.520 one K in five minutes. And it's totally free. Yeah, 0:17:49.560 --> 0:17:52.240 I love that. And there's another website fee x f 0:17:52.400 --> 0:17:56.160 e x uh it's all peak. Yeah, it's also another 0:17:56.200 --> 0:17:58.840 great spot. Until both of these companies can kind of 0:17:58.880 --> 0:18:01.920 review your investments and they take a specific look at 0:18:02.040 --> 0:18:03.680 the fees are inside of them. So if you're having 0:18:03.680 --> 0:18:07.240 trouble pinpointing the fees within your own retirement plan, it's 0:18:07.240 --> 0:18:09.320