Lose The Small Funds
Posted on December 5, 2007 in the Investing, Mutual Funds category
.No I don’t mean that you should not invest in small-cap funds. What I mean is that many investors have a habit of collecting funds.
Over time they pick up funds. These could be funds that that maybe they invested in through a previous employer’s 401(k) savings plan that they’ve held onto, or because that fund just seemed like a good idea at the time.
The problem is that a lot of these funds have a small balance, often around $500. Even if that fund averages 12% a year for the next 30 years, you still will only end up with $15,000.
Now $15,000 is nothing to sneeze at, but it is hard to retire on that amount. Instead consolidating these smaller funds into one or two larger funds will help improve the overall performance of your portfolio.
The same calculation of a fund with a starting balance of $5,000 shows a balance in 30 years of $150,000. Now that is an amount that I can get excited about.
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