Showing posts from September, 2018

Fidelity's New Zero Funds - Free Index Fund Investing Is Here!

I have to admit I was excited when Fidelity announced their new Zero Index Funds.  They now offer new Total Market, International, Extended Market, and Large Cap Index Funds with zero annual expenses.  This is a fantastic development for long term passive investors like myself.  Over the long term, the expenses charged by fund managers can significantly eat into an investor’s returns.  For instance, $10,000 invested in the an S&P 500 index fund over 30 years at an 10% rate of return will have a final portfolio value of $174,494.02.  If that mutual fund were to charge 1% in fees, the annual return lowers to 9%.  After 30 years the portfolio would be worth only $132,676.78.  That’s a significant loss incurred by the investor. 
So why is Fidelity foregoing profits to help out the little guy investor?  Trust me they’re not-the idea is steal market share from other brokerages like Vanguard and Schwab.  Also, most investors don’t just invest in a single fund-while they’re perusing the F…

The Million Dollar 401k – Who Wants to Be a Millionaire?

Every few months the financial press releases an article on the increasing number of 401k millionaires.“Number of 401k Millionaires reaches all time high”“41% increase in number of million dollar 401k accounts”.  The standard advice is offered on achieving this milestone-401k millionaires stay at the same job for years, are high earners, save enough to get a company match-in fact up to 15% of their earnings, and start saving at an early age.Easy right? Of course the ~150,000 401k millionaires at Fidelity represent less than 1% of their total number of retirement accounts.If it’s so easy why is the average American’s retirement savings only $95k?
The average salary in the United States is $56,000 before taxes.Federal taxes drop that number down another 20% (assuming you live in a no state income tax state). After housing-$12,000 rent, transportation $9,000, food $6,000, health care $4,000, and miscellaneous expenses $5-$10,000 there’s not much left for retirement savings.Add in the un…