The Smartest 401(k) Book You’ll Ever Read
Maximize Your Retirement Savings … the Smart Way!
By Daniel R. Solin (Perigee Publishing, $19.95)
“If you’re counting on your 401(k) or 403(b) plan to safely usher you into old age, you’re likely to be bitterly disappointed,” says the investment adviser/author. Yikes! So how does one ensure that retirement isn’t spent under a bridge somewhere? By understanding and properly managing your portfolio.
1. 401(k) plans were intended to benefit employers, not employees, who must shoulder all of the financial risk.
2. “Lower costs directly relate to higher returns.” Small percentage differences in the handling expenses for many mutual funds plans will, over time, rob the investor of huge sums of money.
3. Actively managed funds have an average expense ratio of 1.5 percent. Passively managed funds — index funds — have an average expense ratio of just 0.25 percent. “This significant difference in cost is the primary reason why index funds almost always outperform actively managed funds over the long term.”
4. The past success of active funds should not be used as a predictor of future success. In fact, the opposite it true.
5. The key to creating a healthy financial portfolio is diversification. “You’re aiming to gather assets that have absolutely nothing in common.”
