3 Ways your 401k Fund can Lose Money

While it’s important for one to pick the right retirement fund, it’s just as important to know how to maximize your savings.

As most people know, performance is everything and any negligence in terms of conducting regular portfolio maintenance or who don’t read the fine print can prove to be the fund’s undoing.

So here are 3 ways by which your 401k fund can lose money:

#1: Disclosed Fees

The most common fees that 401k investors have to deal with are the “expense ratios”, and while most people might not care much about a 1% fee, it all adds up over the years when you do the math.

#2: Hidden Fees

While expense ratios are easy to look for, there are other hidden fees such as administrative fees that are taken out in small dollar amounts or partial share that one must look for. This is why it is important for 401k investors to check the transaction history of their 401k statements for these fees.

Reviewing your statements from time to time will reveal that some fees vary in amounts, and it will be probably wise to look for other alternatives to 401k if the fees are too steep.

#3: Cashing out before retirement

Considering the economic situation that we’re grappling with, most people are being forced to withdraw money from their 401k well before they should. As a rule, this should be your last resort as withdrawing before 59 ½ years will results in one incurring steep penalties. This is why experts say that this option should be your last resort.