Page 10 - The Great 401k Rip-Off

Moreover, all that gain came on top of a net loss for the initial 22‐year period. Imagine how much
more you could have had by removing that loss from the equation. In fact, we are going to conduct
an experiment. What would happen if you removed all of the risk from the equation? How much
more do you think you would have had?
You are probably thinking it is unreasonable to believe you could get all of the upside without any of
the downside, and you are correct. But, what if you found out you could get half the upside with no
downside, would that be possible? Yes!
What would that look like?
In the following graph, the red line depicts the actual performance you would have received in the
market, less the 3% average fees [4], from 1987 to present day. The green line shows an investment
that provides 50% of the market upside with no downside, and no fees. The net result is a much
better rate of return without having to pay fees, or bear any market risk. This is a type of annuity that
is tied to the market, without actually being in the market. It can give you as much as 50% of the
upside in the market without subjecting you to the downside, and it carries no fees. Not only that, it
provides 69% more growth, without adding additional risk or fees. As it happens, the best way to
improve retirement plan performance is less risk, not more.

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