You are 28 years old and just started a new job with Grumman. The firm offers you various 401(k) opportunities and after some discussion with your neighbor, an accountant, you whittle it all down to two options: 

Option A - an actively managed stock fund that has earned 7.95% per year during the last 10 years (the stock market paid 7.5% during this period) that charges 1.15%/year of assets for management ?

Option B - an index fund that tracks the stock market and charges 0.05%/year of assets for management. Which one should you choose and why?Expalin?

Answer rating: 100% (QA)

ANSWER AND EXPLANATION Option B is the better option for ... View the full answer