PBS Drops Another Bombshell: #WallStreet Is Gobbling Up Two-Thirds of Your 401(k)

[BlueStreak]

14. I have mixed emotions about this

Clearly the main premise (the 2% business and the resulting nonsense arithmetic) is crap.

But two things:

1) Are there many people trapped in IRAs where they are forced to invest in the highest cost funds? I don't know, but maybe that is possible.

2) Despite the BS math, the fact remains that an enormous amount of money goes into these management fees. A half percent on a billion dollar fund is still 5 million bucks a year. That's a lot of money for what is essentially bookkeeping.

Look at VFAIX, for example:
http://www.marketwatch.com/investing/fund/VFIAX

That has fees of 1/20th of a percent -- which is extremely low. But they have $66 BILLION in that fund. That is 33 million a year in fees for no management (i.e. stock research and picking) at all. Is that fair? For that money, they do have to pay for a lot of computers, customer service people, and auditors. I really don't want them to cut corners on that.