The basics are really simple. Save 15 to 25 percent of your income (use this calculatorto get an estimate for your specific situation); take advantage of tax-preferred savings like 401(k)s and Roth IRAs; buy low-fee index funds rather than picking stocks yourself or hiring an active fund manager to do it for you. If you’re really rich, things can get more involved, but for most people it’s not that complicated.
But handing out free index cards is not a lucrative business, so brokers have to figure out other ways to make money. Traditionally, one of those methods has been receivingkickbacks from mutual funds and other investment vehicles for convincing clients to invest. It’s a practice that the White House Council of Economic Advisers estimates costs savers about $8 billion to $17 billion a year by directing people to buy less profitable assets.