2. Ignoring the “Silent Killer” of Wealth: High Fees

Investment fees are often buried in the fine print, but they are one of the biggest predictors of your future net worth. Most 401(k) participants pay administrative fees and investment expense ratios.

In 2024, the average expense ratio for equity mutual funds in 401(k) plans was roughly 0.26%. However, many plans still offer funds with fees exceeding 1%.

Consider two investors who both start with $100,000 and contribute $1,000 a month for 30 years, earning 7% annually before fees:

• Investor A pays 0.25% in fees. Their final balance is roughly $1.46 million.
• Investor B pays 1.25% in fees. Their final balance is roughly $1.13 million.

That tiny 1% difference cost Investor B over $330,000. In larger portfolios, this “fee drag” can easily exceed $1 million over a lifetime.

“In investing, you get what you don’t pay for. Costs matter.” — John Bogle, Founder of Vanguard

Action Step: Log in to your 401(k) portal and look for the “expense ratio” of your funds. If you are paying more than 0.50% for a standard stock fund, look for lower-cost index fund alternatives within your plan.