Fee's matter, a lot
In this example, we compare expense ratios that are on the high side with ones that are on the low side.
Here we start with $5000, add $300/month, and earn a 6% investment return for 30 years. The difference between paying high fees and paying low fees in this example is almost $50,000!
Now, we can't get something for nothing, right? It is OKAY to pay for investment advice and management, or we here at 401k Tune-up wouldn't be in the business of doing so. What we are after here is REASONABLE fees in relation to performance.
Ultimately, paying a fair price and keeping the fees down plays a huge role in the long term success of your investments. Don't over pay for under-performance.
Performance matters, too
In this example, we compare the difference between earning lower and higher after-fee returns.
Here we start with $10,000, add $400/month, and earn either a 5%, 6%, or 7% investment return for 30 years. The difference between earning an additional 2% a year over 30 years would be over $160,000 in this example!
Now, there is a lot to unpack here. 30 years is a long time and there are many up's and down's in between. This example is useful but doesn't speak to the trade-off between risk and reward in investing. Please see below for a little bit more about this idea.
Bottom line, matching your risk tolerance to the potential performance outcomes of selections available in your 401k account can make a big difference over long periods of time.