Let's say you have a large cap stock fund in your 401(k) that charges an expense ratio of 1.00%. Now both Vanguard and Fidelity offer index funds tracking a broad large cap stock index for expense rations ranging from 0.10% to 0.25%.
You can't predict the performance of the stock market, but over the long run your index fund investment will save you at least 0.75% in expenses year after year
guaranteed. As it is, most funds try to beat the performance of a broad market index, and typically don't succeed over the long term anyway.
IHateTheGMAT is going to knock me for this, but I don't believe in stock picking. Yet, I do believe in manager risk. So in my opinion, an index fund is an ideal investment. However, please note that I am not a licensed investment advisor, so take my advice with a grain of salt and perhaps check our vanguard.com and fidelity.com?
ninkorn wrote:
What's the benefit of opening a higher cost rollover account vs lower cost one? Performance of the fund?