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> buy a broad-based stock fund and forget about it The stock fund is a product designed by a third-party to make money for them, which was the poster's point a

> buy a broad-based stock fund and forget about it The stock fund is a product designed by a third-party to make money for them, which was the poster's point about you not being in control of your pension in that case.

sokoloff 7y ago
In my 401K, I have access to FXAIX (broad-based, S&P 500 fund), for which I pay 1.5 bpp of fees (0.00015 of AUM). If I had a million dollars in my 401(k)'s FXAIX (I don't of course), that would come to $150 in fund fees annually. If I wanted exposure to a broader index of mid-cap stocks, I have FSMAX (Fidelity Extended Market Index), at 4.5bpp (0.00045 of AUM). $1MM in that fund would cost me $450 annually. As I get closer to retirement, Vanguard's Total Bond Market (VBTLX) is available at 5bpp (0.0005 or $500/year for the notional 401K millionaire). It's true that mutual funds pay the managers of those funds, but you don't have to pick the 50 or 100 bpp funds. On average, it's unlikely that population of 401K investors will outperform the population of professional money managers before fees. Not that many people have a 7 figure 401K account. Not all 401Ks allow individual share investments. There's a pretty limited upside to spending even 100 additional hours on 401K investing in an attempt to beat the pros out of their $150-500 in fees.
- WorldMaker 7y ago
  But circling back to the point from above in the conversation: a broad index fund is still delegating moral authority to the index. How do you lodge a complaint with any company in that index? Do you have any power to voice an opinion against a leveraged buyout? You are not a shareholder of that company, you are a shareholder in an index fund that holds that company. You've delegated whatever possible votes you may have to Fidelity or Vanguard. Do they really have your moral and ethical priorities at heart? Can they?

sokoloff 7y ago

In my 401K, I have access to FXAIX (broad-based, S&P 500 fund), for which I pay 1.5 bpp of fees (0.00015 of AUM). If I had a million dollars in my 401(k)'s FXAIX (I don't of course), that would come to $150 in fund fees annually. If I wanted exposure to a broader index of mid-cap stocks, I have FSMAX (Fidelity Extended Market Index), at 4.5bpp (0.00045 of AUM). $1MM in that fund would cost me $450 annually. As I get closer to retirement, Vanguard's Total Bond Market (VBTLX) is available at 5bpp (0.0005 or $500/year for the notional 401K millionaire). It's true that mutual funds pay the managers of those funds, but you don't have to pick the 50 or 100 bpp funds. On average, it's unlikely that population of 401K investors will outperform the population of professional money managers before fees. Not that many people have a 7 figure 401K account. Not all 401Ks allow individual share investments. There's a pretty limited upside to spending even 100 additional hours on 401K investing in an attempt to beat the pros out of their $150-500 in fees.

WorldMaker 7y ago
But circling back to the point from above in the conversation: a broad index fund is still delegating moral authority to the index. How do you lodge a complaint with any company in that index? Do you have any power to voice an opinion against a leveraged buyout? You are not a shareholder of that company, you are a shareholder in an index fund that holds that company. You've delegated whatever possible votes you may have to Fidelity or Vanguard. Do they really have your moral and ethical priorities at heart? Can they?