We've heard it all ad nauseum. How many have cited this quotation from the Department of Labor: A “1 percent difference in fees and expenses would reduce your account balance at retirement by 28 percent”? How many financial advisors misquote a controversial 20-year-old study and say “asset allocation accounts for 92 percent of a portfolio's investment return?” Barely a day goes by without some investment blogger or product salesman using one or both of these pitches.
Would you be surprised to discover these bromides are nothing more than urban legend?
An August study from the Wharton School at the University of Pennsylvania turns the 401(k) universe on its head by showing—while fees and asset allocation do have a nominal influence in achieving investors' retirement goals—often overlooked factors have greater primacy. Astute financial advisors have long known of these important ingredients: investing early, investing more and retiring later.
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Christopher Carosa
Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).
