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EFTA01187655 | EFTA01187675 plans have disproportionately benefited the very rich, while the average 401 (k) participant plan has been stagnant over the past 15 years. One of the reasons for this are fees, pointed out this week in The Atlantic by Matthew O'Brien in his article — The Crushingly Expensive Mistake Killing Your Retirement. When most people think about 401 (k) plans they look at the returns. But the said fact is that returns aren't certain whereas fees are. In the 1990s few people cared about the fees as the financial markets were soaring and the i% of more that people were paying in fees didn't seem egregious. But many managed funds underperform index funds over the short and longer hauls, net of fees. Which is to say, most of them. It's hard enough for funds to beat their benchmarks over just one to three-year periods. But that gets damn near impossible the longer you go. Once one accounts for survivorship bias — that bad funds go bust, and disappear from the sample — almost 8o percent of actively managed funds don't beat simple index funds over 10 to 15-year periods. • Survivorsonly • Sunivers plus %WO' Ards 15-yoar avMwaOn ri 147 "w 9 mot 10, feat evaulltiOn t9 20 0 Steer evaluat, It MO% A ir 40 — / 0 100•4 841 314444 ealo4000 b r i t y•at oval-4'6bn 42: 0 1W 111. a ias 4. 4 t - I In the meantime, you're stuck paying fees. Those fees don't sound too bad—just 1 percent!—but this is where our total lack of intuition for how compounding works really hurts us. L et's try an example: what's 0.99 to the 40th power? It's not exactly a calculation you can do in your head. It's not even one you can estimate. But it's the kind of calculation that you need to do to figure out how much your 401(k) fees are costing you. The answer is a lot more than you think. Example — let's say you contribute $3,000 to your 401(k) every year, which is a little more than the national average, starting when you're 25. Let's also say that EFTA01187675
May 12, 2026 at 9:50 PM