Crapple writes:

I’m 27, looking to start planning for retirement. My company has an arrangement through The Hartford group for our 401K and I read your article on Fund Level Expenses and how the broker will be earning compound interest on MY compound interest. I also ran across this article while researching:(and it also links to a Mutual Fund Expense Analyzer that might be handy for other Consumerist readers). The article is talking about getting yourself involved in an Index Fund that would have fee’s of around .19% or so and going it alone.

Most of the 16 investment options I have through The Hartford have a fee of over 1% (many over 1.25%)…

But to undertake the medium-high risk plan I’ve devised, I am able to keep my fee’s around .91%. I’m about 30-35 years from retirement, and of course I’d like to get the most bang-for-my-buck. But I’m really REALLY green in this area. Now, my company DOES offering matching up to 3% of my wage, and will then match HALF of what I contribute up to 5%…so for every 5% I invest, they’ll match 4%.

I don’t know how to calculate all this, but I need to know if I’m better off sticking with my matching plan in my company, or if I should go it alone with something that has a much smaller fee? I don’t have a lot of up front capital to invest, so maybe that means I wouldn’t even HAVE the option of going it alone. But I’m also hoping to move in about 4-5 years from where I live, and I would have to change companies to do so…so I doubt I’d be fully vested by then, but I figure that starting something now is better than nothing.

If you don’t feel able to point me in the right direction, I’ve read a lot of comments about other investors on the site and was hoping you could pose this to them as well so I could get some feedback.

Thank you!

Crapple,

Matching policies vary by plan so you’ll have to read the plan documents very carefully to figure out what’s up. UPDATE: But you should probably take the match while you work there, then roll it over into a 401k after you leave and invest it in whichever low-fee fund you like. I’m going to go ahead and assume that your employer won’t continue to match after you don’t work for them. Since you think you’ll only be around there for 4-5 years, you’re probably better off going with a low-fee fund. While the employer won’t keep matching your investment, the fund will still keep chomping away at your capital through its compounding fees.

For more information on how seemingly innocuous fund fees can devour most of your retirement fund, read our previous post, “How Your 401(k) Is Ripping You Off.”

(Photo: Getty)

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