Now more than ever there are more people trying to figure out where to roll their nest egg.
With so many people out of work and no new plan to immediately transfer their 401(k) and other retirement accounts to, they are forced to find their own investment company.
Wading through the choices can be daunting. But like most consumer choices, the answer comes down to cost and knowledge. The more you know and understand about the product you are buying, the better deal you are likely to get.
While I don't have room in this column to offer a long list of cost-effective investment options, I will recommend that you check out one new product that offers people a simple, inexpensive way to manage their retirement investments themselves.
It's called MarketRiders, an online investment service company that has designed an easy-to-use technology that lets anyone build, manage and rebalance their own retirement portfolio.
However, before many consumers can appreciate and take advantage of this type of product they must first get rid of the faulty notion that they must pay hefty fees to big investment firms in order to get the best return on their money.
That's simply not true, said Patrick Geddes, a partner at Aperio Group in Sausalito, Calif., which builds and manages indexed portfolios for institutions and individuals.
"Most retail investors are paying enormous amounts of money in fees that they don't need to," Geddes said. "You can manage the portfolio yourself. It's a misunderstanding of how simple the solution can be."
Numerous studies have shown that over the long haul, stock brokers do not beat the market.
For example, take a look at a study titled "Improved Study Finds Index Management Usually Outperforms Active Management" by Millicent Holmes, which tracked asset group performance for a 10-year period that ended in 2004.
The study found that the less expensive index funds - which are simply mutual funds that track a specific market index such as the S&P 500 or Wilshire 5000 - gave people higher return on their investments compared to portfolios that included hand-picked stocks and were managed by investment brokers.
Indexes are less costly because they incur fewer trading and management fees as well as fewer taxes from capital gains. The cost difference between indexes and managed funds typically can be as much as 1 percent to 2.5 percent of your portfolio assets.
MarketRiders allows people to select and trade Exchange Traded Funds, or ETFs, which are low-costs indexes that major institutions such as Yale invest in. The program works in three basic steps. All you do is fill in the blanks and it does the work for you.
First, it requires that you input data including your age, risk tolerance and amount of money you plan to invest. Based on those factors, the program suggests a portfolio of ETFs for you to select from.
Next, MarketRiders sends you a list of trades to make at your online broker account such as E-trade, Charles Schwab, and TD Ameritrade. Once you confirm your purchases, you return to your MarketRiders account and input the exact ETFs you purchased and the company begins monitoring your account and suggests any necessary changes based on the guidelines you set.
Finally, MarketRiders watches your portfolio and alerts you when your account gets out of balance and you need to make an adjustment. For example, if you want to maintain 10 percent in coal, and coal makes increases to 15 percent of your assets, the program will suggest the necessary trades to bring the portfolio back to the desired asset allocation.
MarketRiders charges $9.95 a month, or $99.95 a year. You will pay additional charges to your online broker to complete each trade transaction. Most of them charge from $5 to $13 per trade.
Clearly this product is for consumers who are comfortable with managing their own retirement funds. For those who prefer to sit down with a financial adviser or stock broker that's fine. However, be sure you understand all the costs and fees that you will pay out to your fund manager over time.
To help you figure that amount, you can go to MarketRiders' Web page,
and use the fee calculator.
It will give you a good estimate of how much it's going to cost you to roll your nest egg into a new home.
(Vicki Lee Parker is a personal finance columnist in Raleigh, N.C. She can be reached at