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Is a bad retirement plan eating your lunch? 

The real reason your IRA or 401k is in trouble isn't simply because the market is going down, and will be for some time to come. The real problem is that most plans force you to ride them down! If you can predict that the market will go down, you should be able to make just as much money as you can if it goes up. Except your plan probably won't let you play "short." Most plans only include "long" investment options, with varying levels of "risk and return." As long as you're forced into that game during a recession, the best you can probably do to protect your money is to find low-risk, low-return money market or bond funds. Because of the penalties, it is very rarely a good idea to take money out of an IRA or 401k account! But if you have no other choice than a low-return investment, you might lose less even by taking it out than if you keep it in speculative stock funds that are losing value. I can't recommend that, but it's quite discouraging to realize it.  

Find out about your TOTAL fees!

Most small IRA and 401k investors pay little or no attention to the fees that are included in their company plans. These often include significant added charges in addition to the expense ratio of each investment. They are never evident, and usually very carefully hidden from you. If there are any disclosure rules at all, they are not sufficient. This is a trillion dollar scam, encouraged by tax incentives. Most company retirement plans only offer investment choices with the highest total expenses. When you find out what all of those fees and expenses actually are, you will feel as violated as if someone robbed you while you slept! You won't believe me until you verify this yourself, but you are likely to discover that your trusty retirement plan is stealing 3 to 4% of your total principal each and every year! The only reason this isn't more noticeable is because you are continually adding principal!

With the exception of one single anomaly (the Jan-1995 to Jan-2000 boom), the S&P has never risen enough over any five-year period to cover that theft.
        And once again...that doesn't even account for inflation.

Again, the S&P represents the average performance, before expenses and inflation, of all mutual funds and stocks. I hope you're not still wondering why your retirement nest egg hasn't grown to millions, like the prospectuses promised. Most likely, the only growth you're seeing is from your deposits. And the only reason those make any sense, is their tax avoidance value, plus any matching employer contributions.

Talk to your HR department, tomorrow! 

I am not suggesting that your company is stealing your money. Those fees and expenses are not going to them. They probably just took an easy way out, without performing a complete enough search to find you, the employee, the best available deal. Until quite recently, better options were hard to find. It was a trillion dollar price-fixing scheme.  If enough employees ask, management can and will find a more reasonable plan administrator. The groundswell of informed, disgruntled investors is just beginning.

Lower fees! More options!

There are two vital requests you need to make of whomever selects your company retirement plan: Lower Fees and More Options. If HR does not respond, speak with the President. Believe it or not, they have the option to select a plan that charges you a flat rate of only $50 per year, and that offers thousands of investment options instead of just a few dozen.

In a future column, I can show you just how much this is costing you over your work years. But it will be far more valuable if you investigate your own plan. Just imagine the effect of charges of 3 or 4 percent every year, even when you may already be losing money on your investments. Mutual funds appear better, because few of the bond or money market funds offered by these plans would rarely even pay enough to cover these charges. And even the average mutual fund rarely breaks even over 5 years.
The cumulative losses to you are staggering. If it weren't for the taxes you avoid, a simple savings account would do better, with virtually ZERO risk!

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New ideas for small investors