I have a retirement plan 401K from work. The employer does NOT contribute anything. I just enrolled into account and got to know that there are fees associated with the account. The fees is ridiculous! It is $10.90 for every $1000 per year. Are you kidding me!!!
Also for a certain mutual fund you see the following stats:
1 year return 3% 3 year return 6% 10 year return 5%
What does that exactly mean?
Does that mean that if I hold my mutual funds for 10 years I will get 5% return on it. So lets say in 10 years I have 100K in the mutual funds account then
100000 * 5% = $5000
Does that mean I only made $5000 in 10 years on my balance of 100K?
Since my 401K plan stinks what are my options. If I put my money in a traditional IRA then I lose my pre tax benefits right!
What can I do?
Just clearing up the question. My current employer has a 401K. Most of the funds have the expense ratio of 1.20%. There is NO MATCHING CONTRIBUTIONS.
I already have a ROTH IRA (Individual) and I contribute MAX. I also have a 401K from my old company in which I DO NOT CONTRIBUTE.
Should I convert the 401K of my old company to Traditional IRA and start investing in that instead of investing in the new employer 401K plan with high fees.
For the expense ratio the document says something like this: Heading: Total Annual Investment Choice Operating Expenses As % = 1.09% Per $1000 = $10.90 The above is for one of the funds. There ar funds with 1.28% and $12.80 per $1000.
THE LIMIT OF CONTRIBUTING TO THE 401K is $17000 (17K).
First of all thanks to everyone for all your help!
I think I will invest 6%-10% of every paycheck to the 401K for the tax benefits. Also, I am planning to move my ROTH IRA and old employer 401K from the TRowe account to Vanguard since Vanguard have very low expense ratio.
After that I will open another ROTH IRA for my wife where we will contribute small amounts monthly.
I think having investments in many different buckets will payoff in the future!