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Many Pay High Investment Company Fees For Services They Don't Use, Survey Shows (consumerreports.org)
Penelope Wang, writing for Consumer Reports: If you are investing in stocks, bonds, or mutual funds, you have a wide range of options to help manage your portfolio -- everything from traditional brokerages to mutual fund companies to online financial firms. But as consumers search for an investment company, many pay little attention to the fees they're being charged, according to a just-released Consumer Reports survey of more than 46,000 CR members. Four out of 10 surveyed said they weren't sure what they paid in fees. And of those who knew the costs, only 60 percent rated their investment company in our survey as Excellent or Very Good on the amount charged.
"Hidden and confusing fees are proliferating across the marketplace, making it hard for consumers to know what they're getting for their money, and to comparison shop across providers," says Anna Laitin, director of financial policy at Consumers Union, the advocacy division of Consumer Reports. "It is concerning that so many investors don't know how much they are paying in fees and that many of those who do understand the fees don't appear to think they are getting their money's worth," she says.
"Hidden and confusing fees are proliferating across the marketplace, making it hard for consumers to know what they're getting for their money, and to comparison shop across providers," says Anna Laitin, director of financial policy at Consumers Union, the advocacy division of Consumer Reports. "It is concerning that so many investors don't know how much they are paying in fees and that many of those who do understand the fees don't appear to think they are getting their money's worth," she says.
Am I on the wrong website? Since when is this news for people who exchanged all their humanity for money?
Oh come on man. Look at the tech industry these days, not only has just about everyone given up on their humanity, they have also sold out their intellectual integrity and any morals they may have had for money, and the chance at a reasonably priced rental.
Everyone knows it and they expect it. If people didn't expect to get ripped off on some level they'd be moron's.
--
I wake up laughing -- Bruce Willis
Not like the financial industry is a paragon of morality or intellectual integrity. Usury has had a bad name for millennia, and the proliferation of questionable economic theory (that just happens to benefit the rich), and bank bailouts, should drive the final nails in that coffin.
I'm surprised the investment companies aren't more of a confusopoly, considering related financial services (banks, credit cards) are. Might be down to better competition.
Corruption is convincing someone that the selfless ideal is the same as their selfish ideal.
Also, humanity is overrated. I'm just waiting for better VR tech, then I can spend some quality time with my Waifu.
People chuckle about sexbots, but virtual significant others will come before even that. An AI that can accurately simulate every facet of an SO is difficult; one that can simulate only enough to be the best lover you've ever had is FAR easier, just like how drawing an ugly person takes far more effort and skill than drawing an impossibly beautiful one.
Corruption is convincing someone that the selfless ideal is the same as their selfish ideal.
No, I do not expect anyone to be a criminal.
And ye, make no mistake, theft, robbery, fraud, usury, racketeering and profit, interest and "intellectual property" are all crimes, and the same kind of crime too: Taking money, and giving nothing back in return. (Every case of giving back something of non-equal value can be split into a case of a fair deal and a case of giving nothing back. E.g. in the case of a sale, the latter is called "profit".)
And if somebody *is* a criminal, I can expect me and my social group to punish him.
Of course, if the ones with the biggest sticks *are* said criminals, then they write rules (laws) that say that they are not criminals, but nice people, with happy feelings, ALL of the time, and we have no way of punishing them. At least until we manage to get the bigger stick.
WOAH, sounds just like Comcast and CenturyLink!
Unless you're a very high net worth individual, you probably don't have access to the sorts of funds that charge a percentage of assets under management and even if you did you'd be better off without the professional traders. Instead you probably pay commission on trades and the financial industry is setup to get you into a trading mindset. They're always trying to get you into this or rotate out of that so that they can make extra trade commissions off of you. Warren Buffet was right when he observed that you should treat trades like an extremely scarce commodity. The example he used was of a punch card with 25 punches on it representing all of the trades that you will make in your lifetime. If you don't want to own a security for 10 years then you sure as hell don't want to own it for 10 hours or 10 minutes. If you think that's crazy then consider this. Warren Buffet defeated all challengers in his ten year charity benefit investment competition starting in 2008. How did he do it? He bought the S&P 500 Index fund and sat on it. Buffet won handily with an average 7.1% return, including the time period of the Great Recession, against a runner up of 2.2% average return for the next best actively managed portfolio. Think about that the next time an investment broker pitches you a financial product or a trade. The old adage still applies. If it sounds to good to be true it probably is.
Just remember that people...a 0.5% reduction in fees is often a 40% INCREASE in your pension when you retire. The numbers are so small i.e 0.5% that most people don't seem to do the math or care. But here's how it works
Your average return is probably around 4-6% each year if you are 60/40% bonds/equities or similar (this can be higher or lower obviously) for general employee 401Ks that most people don't look
So your REAL return is minus inflation lets say that's around 2.5% - so you are actually only getting 1.5%-3.5% ..
Your 401K provider then takes 0,5-1.5% of this!! That's basically saying they take no risk and can take 40-100% of your return for providing an IT platform, some customer service and linking to exchanges and brokers...
Frankly its ridiculous - its like Microsoft charging you a % fee for how much you make from its products...investment products should obviously be charged at a flat fee i.e 40USD/ mth like any other service...but then, that's why they can afford to lobby politicians and drive a porsche whilst the people who retire on their 401Ks live out a meager lifestyle and wonder where their money went!? All because they can't be bothered to look at their 401K or plan for the future...its a great system for the motivated to rob the unmotivated.
Take heed...investigate what your paying and move to index trackers or trusted funds that charge more BUT RETURN MORE TOO!
...investment products should obviously be charged at a flat fee i.e 40USD/ mth like any other service...but then, that's why they can afford to lobby politicians and drive a porsche whilst the people who retire on their 401Ks live out a meager lifestyle and wonder where their money went!?
No. People aren't going to PAY 40$ a month (or any amount for that matter) to invest. That's silly and you know why because you explained the reason people don't seem to "care" about the 0.5% yourself. They don't even notice it. It'll hurt when they run the numbers once it comes retiring time; but not as much as if they didn't invest for retirement at all, like most people nowadays seem to do.
I tend to rant.
Seriously, just use Vanguard.
less than 10 basis points for alot of the mainstream indexes and no commissions...
This is a very real problem, but in what universe is this within the Slashdot remit?
Next up - refrigerator shelving that cracks and yellows before its time!
For normal people, investment companies are a racket. They exist to take your money...and keep it.
If you go to an investment brokerage that actively manages your money, they not only have their own fees, they also love to buy into high-fee mutual funds that give them a kick-back. My mother had her money with a name-brand brokerage, with a broker she considered a friend - and they still kept buying and selling these high-fee mutual funds. The buying is bad enough, but cashing out and buying into another fund a year later is... Well, it's very clever. For the broker. Who is fulfilling their primary goal of keeping their clients' money for themselves.
Normal people wanting to invest really have only two choices:
- Take charge of your own investments. Learn what you're doing, and buy stuff for the long-term. If you buy a stock, buy it with the intent to keep it for several years.
- If that's not your thing, they buy low-fee index funds. In addition to the market index funds, there are also more specific ones out there. The point is, they are funds with little management, and hence very low fees. Buy into index funds, and sit on them for the long term.
Enjoy life! This is not a dress rehearsal.
Once you are kicked into the gutter it will be too late. There is short window where America's side into a third world country can be reversed, but it won't last long.
The current set of Republican grifters must be unseated and then prosecuted for their crimes. That, unfortunately, is only the beginning, because they will only be replaced by a different set of professional looters. The only way out of this mess is for voters to elect candidates who are more honest then what we have now. It's going to take decades, but it's that or dictatorship will prevail.
Why is Snark Required?
A bit of misplaced blame there. Everyone wants to get by, but we have ~30% taxes on income, ~35% taxes on corporate profits, ~5% taxes (average) on sales, 2.5% average inflation compounded annually since the 1980's, etc - all in all getting your money to the maker of a product you're looking at paying out about 80% of that just in taxes before it reaches the poor bastard assembling the thing (and that's a best case scenario when you're buying direct from a manufacturer, it only gets worse from there.) Historically societies have collapsed right around the 50% taxation mark, we're long overdue for that and everyone (very likely every software developer, engineer, and other nerd on this site included) is in the exact same boat of thinking about how to get the most out of their clients without alienating them in the process.
TL;DR: The issue is taxes, not people being greedy on the civilian side.
If you do not put your retirement money into Vanguard Index 500 Fund that tracks the S&P 500, you're not playing the odds. It's automatic, so nobody at Vanguard's compensation is likely to be increased by decreasing your total return, low-fee and tracks 500 stock-index so it's diverse and transparent.
In terms of time-periods similar in length to a normal American's career, the returns earned from dollar-cost averaging into the market are probably the best you're going to do with the lowest risk. Over short terms, volatility and risk increase. But retirements now, routinely go more than 15 years and you won't need to spend all of your money at one time, just about 5% per year, for most of us, so even in the first 5-10 years of retirement having a large portion of your liquid net worth in Vanguard Index 500 is likely a winning strategy.
Another popular retirement investment strategy is to buy canned beans & ammo by the pallet.
that investment firms would be legally required to have their clients best interests at heart (Fiduciary Responsibility and all that).
/.? I get that we're an aging demographic but is this a slashvertisement or something? Does the parent company of /. own the linked article? Ah well.
I'll give you 3 guesses what happened to that rule when the administration changed....
BTW, what the *bleep* is this doing on
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A bit of misplaced blame there. Everyone wants to get by, but we have ~30% taxes on income, ~35% taxes on corporate profits, ~5% taxes (average) on sales, 2.5% average inflation compounded annually since the 1980's, etc - all in all getting your money to the maker of a product you're looking at paying out about 80% of that just in taxes before it reaches the poor bastard assembling the thing (and that's a best case scenario when you're buying direct from a manufacturer, it only gets worse from there.) Historically societies have collapsed right around the 50% taxation mark, we're long overdue for that and everyone (very likely every software developer, engineer, and other nerd on this site included) is in the exact same boat of thinking about how to get the most out of their clients without alienating them in the process.
TL;DR: The issue is taxes, not people being greedy on the civilian side.
You're right taxes end of things. But think about how the people who actually benefit from them have turned the electorate against itself. Taxing people to build a 100 billion dollar high speed rail line that is nothing but graft ? Distract the electorate with a satellite to police other states (U.S. and foreign) carbon emissions ?? Or start up another war promoting really strange people over those that are qualified and force everyone to address them by whatever they feel like ?
If anyone goes against it, sick the mob on them. Heck if they start to forget their place, destroy someone for making a joke or wearing the wrong shirt, to remind them.
Re the prior comment. Man I do need my coffee but the gist is correct. People in tech have allowed themselves to become whipped dogs, to just get by. They allow themselves to be easily manipulated by pardon the term fairy stories, while they are being robbed.
Since when is this news for people who exchanged all their humanity for money?
If the saying "early is on time, on time is late" had a corollary in personal economics, it would go something like this: "Investing is keeping up, saving is falling behind."
Investing is a normal activity for people to engage in, especially since interest rates on ordinary savings accounts haven't been keeping up with inflation for quite a while. I don't think you have to have exchanged all of your humanity for money to have some concern for how a confusing fee landscape might impact an ordinary mortal's putting money away for a rainy day/retirement. Nerds who have managed to get a little ahead might be very interested in understanding how to avoid being fleeced while investing.
I'd extend that a bit. Saving (getting interests) *never* keeps up with inflation over any significant amount of time. There may be short periods when inflation drops but there's an overhang of higher interest on secure bonds and accounts that were bought before the drop, but over the long term interest is always below the rate of inflation. If you want your money to keep up with or beat inflation, it has to be invested in something that inflates along with inflation, or faster. That's stocks, real estate, etc. Dividends also, from well-chosen companies, tend to keep up with inflation or only fall slightly short. If you want bonds that keep up with inflation, you're not going to be focusing on "investment-grade" - probably closer to junk, where the risk is more like stocks but the liquidity is worse, and not long-term.
One amusing marketing trick I've seen locally, recently, is savings with an OMG HIGH interest rate - on the first $500 only. Once your balance gets big enough to notice, the rate drops to the usual pittance, or even lower to compensate for the rate on the first $500. That's a nasty teaser.
Dont watch any financial news channels, There is not enough info to fill 24x7. They fill it with fluff, speculation and misinformation. Makes you trigger happy, second guess yourself and trade. You lose time and money.
Most retirement planning advice is bullshit. They assume you will spend in retirement as much as you are spending when you were earning and have no flexibility in spending. Estimate you expenses into a four categories: Essential (food, shelter, clothing, medicine) Discretionary (travel, entertainment, charity), Indulgence, Principle Protection (money to be reinvested on good years). First goal, save enough for essential without touching the principle, then discretionary. Then for Principle protection. Then for indulgence. Spend less on lean years. Spend more on good years. Reinvest in good years to hedge against inflation.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
If I had mod points I'd give them to you. Instead, I'll just mention that back in '82 when I was just 23 yrs old, with $600 to my name, I made my first stock purchase (60 shares of Detroit Edison), because I knew I could do better there than what I was getting from the banks. I reinvested the dividends, through the company's dividend reinvestment program (DRIP), at 5% off of the market price, and no fees. Somewhere along the way, I sold off the original shares. but what remains is pure profit in the mid $30k range. Not a lot of money these days, but that was a good start. These days, I wouldn't recommend individual stocks to anyone who doesn't have a serious amount of time to do research. Go with an index fund, and dollar cost averaging (put the same amount in every month no matter if the market is up or down). Retire early.
Just another day in Paradise