Woman Reads Free Money Finance, Changes Investment Options, Makes Over $123,000

Yes, I'm getting a bit over-the-top on the headlines. Guess I've been reading the Consumerist too much. ;-)

But I'm so excited about what happened here! When I wrote $10k Challenge: Maximize Your Investments, this is EXACTLY the person I was thinking of. A comment left on that post:

I just moved my rollover IRA from the default option (the same company the 401(k) was with) to Vanguard. I'm going to save close to 1% in fees, which is like earning another 1% on the investments. Check your investment fees, you might find a place to "cut the fat" and save some cash.

This young lady (I can say "young" since I'm over 40) at age 30 has 40 or so more years of investing left. That extra 1% will earn her over $123,000 if it simply moves her from a 9% return to a 10% return and she invests $10k a year. If it moves her from 10% to 11%, she earns even more. For specifics, check out $10k Challenge: Maximize Your Investments.

So what's the point for the rest of us? It's a reminder that costs matter if you want to maximize investment returns. Keep your investment costs as low as possible and you'll be on your way to building a significant portfolio.

Comments

[Rich Schmidt]

I think you mean "and she invests $10k a year" instead of "410k a year."

:)

[Chris]

I was under the impression you could only add $4k per year (until age 50). how would she invest 10k a year?

[William Tanksley]

It's a 401k; the contribution limits on 401ks are _much_ higher than they are for an IRA. I think they're something like $15K. Yeah, this FMF typo is pretty distracting... :-)

[FMF]

Ha! Wouln't you know it -- a typo always happens when I'm away for the day. It's fixed now!!!! ;-)

[tinyhands]

Let me be the first to say congrats to her.

Getting over the fear of the unknown, especially with something as important as money and retirement savings, is a big impediment to many people. This is a pretty easy change though, so if any other readers are procrastinating, just do it!