Ask Terry Questions Investment thru work

Investment thru work

By Terry Savage on April 24, 2017 | Financial Planning / Retirement

The company I work for has an investment plan, sort of. They don't put anything into it, they just have a company that sells us mutual funds, the money is taken off the top and is put into a SEP IRA. The nice thing is that the money is taken before I get my check, you don't feel it. The down side is that they charge 5%. I stopped contributing, thinking I could do it myself, that was 3 years ago and have not put a penny in since. Other possible options? Is 5% too high?

Terry Says

Aha!  My mother used to say:  "The road to hell is paved with good intentions!"  That's the real benefit of employee plans that take an automatic deduction from every paycheck:  It gets done!  BUT, you are absolutely right that 5% is way too much to pay for this service. First, complain to the boss that they employees are getting ripped off.  Then tell everyone to contact Fidelity (800-FIDELITY) or Vanguard (800-VANGUARD) and set up an IRA (preferably a Roth IRA) in their S&P 500 stock index fund, with an automatic monthly deduction from your checking account.  That will cover all the bases with no upfront fees, and minimal annual costs.  Now it's up to you to actually do it -- or find out what "retirement hell" really looks like!

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