Written by Andrew Altman

Retirement planning is an important financial endeavor which every working individual should consider early on in their career. Not so much information is available for investing the dollars you stash away from every paycheck to your retirement account. Save and save some more. This is the most common advice dished out to anyone funding a 401(K) plan.

Many funds exist in the market today (over 11.000) where you can invest your retirement savings for a healthy profit. An ideal fund should be inexpensive to hold, diverse, and have the potential to invest in high-yielding stocks to generate more income for retirees.

Additionally, they offer tax free (equity funds) or tax efficient (debt funds) returns to the soon-to-be retirees. We recommend that you choose one that meets your long-term goals and has most of the qualities we mentioned before. Once you have your goals established, it’s time to hit the ground running and start looking for funds that match your search criteria.

Here are a few tips you can use to find a suitable fund for your retirement savings.

The Cost Factor

The internal cost of a mutual fund referred to as the expense ratio, makes it to the top of our list and for good reasons

Suppose you have the option of investing $2000 in a fund that has an annual expense ratio of 1% or a similar amount in a fund that has an expense ratio of 0.5%. The second option that has lower expenses would be the better pick. The 0.5% difference translates to an extra $500 in your pocket every year. Which is quite a tidy sum if you ask me. An extra $500 can add up to a substantial amount over the course of a twenty year retirement plan.

Studies have shown that funds with lower expenses blow away the competition that has higher expenses. Index funds are a good example of low cost funds that are known to deliver solid performance. A diverse portfolio using index funds can act as a strong foundation for low-cost retirement plans.