How do companies make money from selling IRA’s or other retirement plans?
Posted by admin on Feb 8, 2010 under make money
Whether it is a 403(b), 401K, or just an IRA, how do companies make money from this. When you give them money doesn’t all of it go into the investment or do they hold some back for themselves? Or do they make money by not giving you the full amount of the invested money back. Like if it earned 10%, they would pay you 8% and take 2% for themselves. Or am I completly off and there is another way they make money.
If it’s invested in mutual funds, those funds have internal management costs build into them (expressed as Expense Ratio, or E.R.). If it’s a brokerage account, the brokerage obviously charges fees on buy/sell transactions. If it’s a bank (CDs, etc.), the bank makes money on the deposits just like they do on any other deposits.
They often will have an upfront fee of a certain percentage, called a "load." They will also charge a certain percentage a year, called a management fee.
References :
If it’s invested in mutual funds, those funds have internal management costs build into them (expressed as Expense Ratio, or E.R.). If it’s a brokerage account, the brokerage obviously charges fees on buy/sell transactions. If it’s a bank (CDs, etc.), the bank makes money on the deposits just like they do on any other deposits.
References :
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