Question: Want to make a well-paid mutual fund manager angry?

Correct Response: Of course!

Now that we’ve established that, here’s how:

Tell that individual, and his or her Wall Street puppetmasters, that you are doing all of your investing within the federal 401k plan. It has the lowest administrative fees in the business. And that’s good for you but terrible for most mutual funds which make a ton (as in pots) of money handling your money.

Example: The federal TSP’s popular C-fund. It tracks the S&P 500. The C-fund charges you one basis point, which is 10 cents for each $1,000 of your account balance. By contrast, the next lowest mutual fund in the business charges 19 to 20 basis points for its S&P 500 index fund. Some others charge much, much more. Like 0.5 percent which is 50 basis points or 1.5 percent which is 150 basis points.

What does the fee cost translate to? The January/February AARP Bulletin warns readers about paying high fees. It calls them a leak that, “could dribble away thousands of the dollars you’ll be depending on for a comfortable retirement.”

The example it has cited:

• A 30-year-old has $25,000 in his/her 401(k) plan. If that account earns 7 percent and has a fee of 0.5 percent a year the individual, without making any other contributions, will have $227,000 at age 65.

  But…

• If that same account, same individual has to pay a fee of 1.5 percent the account will be worth $163,000 at age 65.

By paying what appears to be an only slightly higher fee (1.5 percent vs. 0.5 percent) the hypothetical investor loses 28 percent.

The TSP’s low fees may explain why 923,000 federal/postal/military retirees left their money in the TSP when they retired.

Overall there are 3.9 million accounts.

A few weeks back Paul Farrell, columnist for www.marketwatch.com, again took aim at how Wall Street is getting fat from overly high fees.

He was a guest on Your Turn.

It’s our hour-long (10 a.m. EST each Wednesday) show featuring Francis Rose and me.

We asked Farrell about the TSP. He gave it high marks, particularly because of its low administrative fees.

That show was archived and you can listen to it by clicking on the link above this story or going here.

John Bogle, the man who started up the low-fee Vanguard group of funds, also says Wall Street charges you too much — in many instances — to manage your money. He, too, is a big fan of the TSP’s low fees.

Today at 10 a.m., we’ll be talking with financial planner Arthur Stein. We’ll ask him about the pros and cons of keeping your money in the TSP after you retire — and about managers fees for mutual funds.

Listen up and if you have a question or a comment, give us a call or send us an e-mail. Let us know if we can use your name on the air.

Scholarships For Feds

The Federal Employee Education & Assistance fund (FEEA) is accepting applications for its 2008-09 scholarship program. Last year 3,305 students applied for FEEA scholarships. It awarded just over $471,000 to the 481 selected for the program.

The deadline for applications is March 28, 2008.

You are eligible if you are a federal or postal worker with at least 3 years of service. Dependents are eligible too.

For more information and a downloadable application form, click here. And good luck.

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