Mutual Funds Are Costing Your Retirement In Excess Of One Million Dollars Over ETFs
Mitch Tuchman of MarketRiders.com, discusses with CNN’s Ali Velshi and Christine Roman how mutual fund fees devastate your IRA over many years. Mitch generated a simple list of constants to compare a mutual fund retirement portfolio to an ETF portfolio. What he finds, should make your stomach turn. Mitch took an average 35 year old who chooses to invest $4K per year in their retirement portfolio earning about 7.5% on average. If that person continued this method for the next 41 years, the ETF portfolio would yield them $3.15M, while the Mutual fund portfolio would yield them $2.04M. That investor lost over $1M in retirement savings to fees that many would consider negligible. To add insult to injury, Mitch throws an investment advisor into the mix knocking off almost two million of your retirement to fees.
See the full video below:
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Editorial note: “per month” has been corrected to “per year”.
I think the author of this article mis-stated the facts. Mitch is talking about $4000 ANNUAL contribution to an IRA, not per month. This is the average contribution to IRAs and it is a yearly amount. That makes much more sense. But the fees are a huge percentage and that is outrageous.
Seriously, who is putting the average american’s salary in their 401K every year. Pretty sick to think the difference though. Even scaling things back to my contribution it is still 50%+ THAT’S CRAZY!!!
Who makes that kind of money that they could put anywhere near 4k per month in a retirement account? Very few could do that, only the rich, which makes their point rather ridiculous. I’m assuming those people talking about it are very rich people.