Fees: What's Worth Checking and What's Just Internet Noise
Okay. Still in "Small Amounts Count," and this one's been on my list since I started this class, because I have a very specific opinion about it and it's a little contrarian.
Here's the thing. The internet loves a fee panic. You'll see posts that say expense ratios are robbing you blind, switch everything today, your advisor is a thief. And sometimes that's true. But a lot of the time it's noise dressed up as urgency, and I don't want you to freeze up over a decimal point when the real problem is that you haven't opened the account yet.
So let's sort out what's actually worth twenty minutes of your time, and what's just people yelling on the internet.
What fees you're even looking for
There are basically three kinds you'll run into.
Expense ratios. This is the annual fee a mutual fund or ETF charges to run itself, shown as a percentage. Something like 0.05% or 0.75%. It comes out automatically, you never see a bill, which is exactly why people don't notice it.
Account fees. Some 401k plans charge an administrative fee just for having an account there, separate from the fund fees. This shows up on your quarterly statement, usually in small print, usually with a name like "recordkeeping fee."
Advisor fees. If you're paying someone to manage your money, they might charge a flat rate, an hourly rate, or a percentage of assets under management, often around 1%. I don't have an advisor myself, I'm a bookkeeper not an advisor, but if you do, you should know exactly what you're paying and why.
What's actually worth checking
Pull up your 401k or IRA statement, or log into the account online, and look for the expense ratio on each fund you're in.
- Under 0.20% — that's a good number, don't spend more time on it.
- Between 0.20% and 0.75% — worth a look, not a crisis.
- Over 1% for a plain index fund — that's worth asking about. Sometimes there's a cheaper version of basically the same fund sitting right there in your plan and nobody pointed it out.
Also check for an account-level fee on your statement, separate from the funds. If your 401k charges you $20 a quarter just to exist there, that's not something you can fix, since it's baked into the plan your employer picked. But it's good to know it's there so you're not confused later about why your balance doesn't match your math exactly.
What's mostly noise
A 0.10% difference between two index funds. That's a dollar a year on a thousand dollars invested. I've seen people spend an entire evening comparing two funds that are practically identical, agonizing over hundredths of a percent, and never actually get around to increasing their contribution, which would do about a hundred times more for them.
Here's my opinion on this, and I mean it: fees matter more than people think and less than the internet screams. A high fee is worth checking. But arguing about a tiny difference while contributing nothing is missing the point entirely. If you're not maxing your employer match yet, that gap matters more than any fee comparison you'll do this year.
How to actually check it, step by step
- Log into your 401k or IRA account, or pull out the last statement that came in the mail.
- Find the list of funds you're invested in. Each one should have an expense ratio listed, sometimes under a tab called "fund fact sheet" or "fund details."
- Write those numbers down. By hand, in your ledger if you're using one, next to the account. I still think the pen makes you feel a number the screen lets you skip past.
- If anything's over 1%, look for a similar fund in the same plan with a lower number. Same category, lower fee, is usually a fine swap. If you're not sure it's the same category, that's a fair question for HR or the plan provider, not something to guess at.
- If you have an advisor, ask them straight out what you're paying and how. Not accusingly. Just ask. If they get weird about answering plainly, that tells you something too.
That's it. Twenty minutes, tops.
I keep a folder of things I've written that almost nobody's read. One of them is a few pages about the ledger, why I started it, what it's turned into. I'm not going to hand it out, but I'll tell you the short version of what it says: the number on the page only means something once you've actually looked at it. Fees are the same way. They're small, they're boring, and they sit there quietly doing something to your money whether you check or not. Checking once, calmly, is enough. You don't need to check every month.
Before next time
Find your expense ratios this week, just the checking part, and jot them down somewhere. Next time we'll talk about what to do if you've got money scattered across old accounts from old jobs. 💛