This 1 retirement expense can cost you thousands, and most retirees miss it completely. Are you falling for this trap?

And the research supports his argument. Only 33% of actively managed mutual funds and exchange-traded funds (ETFs) survived and outperformed their average passive peer over the 12 months through June 2025, according to Morningstar (6).

“The record shows that the unmanaged index fund is going to do quite well over time, and active investment as a group can’t beat it,” Buffett said in the same interview.

Since an AUM fee is typically proportional to your assets under management, it will only increase as your portfolio grows.

According to Morningstar’s report: “‘Headlines about active managers’ superiority in navigating turbulence often decorate market declines. The data rarely backs this up — at least for the average active manager.”

Read More: Approaching retirement with no savings? Don’t panic, you're not alone. Here are 6 easy ways you can catch up (and fast)

Consult a fiduciary expert

Put simply, these expenses are avoidable. And cutting them out could save you a lot of money in retirement. That's why billionaire investor Warren Buffett recommends that everyday investors stick to low-cost index funds.

Still, most financial experts agree on one thing — you shouldn’t put all your eggs in one basket. And not everyone is aware of their options, even when it comes to ETFs and index funds.

With economic uncertainty on the rise, building a diversified portfolio can give you more breathing room, especially if the market takes a hit. This way, you can reduce the risk of needing to withdraw money during a downturn or watching a chunk of your savings get wiped out.

That’s why it can help to talk things through with a vetted financial expert at least once. They can walk you through your options and help you invest wisely so you can protect your nest egg for the long haul.

You can easily connect with a vetted FINRA/SEC-registered financial advisor near you for free through Advisor.com.

All you have to do is answer a few questions about your financial situation, and Advisor.com will connect you with a qualified expert. Every advisor on their network is a fiduciary, meaning they’re legally obligated to act in your best interests.

Hiring a financial advisor can also be a lifelong commitment. That’s why Advisor.com lets you set up a free initial consultation with no obligation to hire to see if your match is the right fit for you before making a decision.

Overpaying could be a costly mistake

Cutting even a few basis points from investment fees could make a big difference over the long term.

To understand this, assume you retire with $1 million and put the money in an actively traded mutual fund with a 1% fee. Your fee expense is $10,000. Meanwhile, based on Morningstar’s data, you’ll be lucky if that actively-managed fund even matches the performance of its cheaper, passive counterpart.

For instance, you could invest that same $1 million into a low-cost passive fund, such as Vanguard’s S&P 500 ETF (VOO) with an expense ratio of just 0.03%. Your fee for a single year is just $300, and the performance is likely to be just as good, if not better, than an actively-managed fund.

Assuming equal performance, you’d pay $9,700 more for the active fund in a single year. That’s the cost of a nice vacation. Over several years of compounding and opportunity costs, this could drain tens of thousands of dollars from your net worth.

And the best thing about cutting investment fees? It’s easy to pull off and doesn’t require any lifestyle adjustments.

Use an online stock broker

With platforms like Robinhood, you can invest in ETFs like the Vanguard S&P 500 to get a start on your nest egg.

Robinhood has 24/7 support, and you won’t pay any commission fees on stocks, ETFs and options. Their platform also offers both a traditional IRA and a Roth IRA, so you can benefit from tax-efficient retirement investing. You can also set up recurring investments of your preferred fractional shares, stocks and ETFs on your own schedule. Over time, this helps make investing a habit and steadily grow your portfolio.

Even better, new Robinhood customers can also get a free stock once you sign up and link your bank account to the app.

You can pick your stock reward from top American companies, with amounts ranging from $5 to $200.

Become a wiser investor

While Warren Buffett recommends beginners to stick with index funds, he didn’t build Berkshire Hathaway’s fortune by investing everything in just one fund. As of the third quarter of 2025 — before Buffett retired — Berkshire Hathaway’s wealth was concentrated in just 41 stocks — underscoring the importance of picking your stocks with care (7).

But for most investors, it can be difficult to identify value stocks with precision. Fortunately, you can get advice from hedge fund analysts, thanks to platforms like Moby.

Moby’s team of former hedge fund analysts and experts spend hundreds of hours each week sifting through financial news and data to provide you with breaking stock recommendations. And if you sign up for Moby Premium you get one free top-stock.

Moby’s stock picks have outperformed the S&P 500 index by about 11.9% over the past four years.

Even better, Moby offers a 30-day money-back guarantee so you can see if the service is right for you.