Choose Wisely or You Could Be Out Millions

It's hard to deny. Watching your retirement savings ride the market's roller coaster ignites more fear than discovering that your mother-in-law is "stopping by" for the next two weeks.

Fortunately, like your mother-in-law's visits, these ups and downs are temporary. They're also insignificant. 

Whatchoo talkin' 'bout, Wiederman?
Don't get me wrong -- losing tens of thousands of dollars in one day is a great reminder to schedule the cardiologist visit you've been putting off.

But, as Robert Brokamp reminds in his Rule Your Retirement newsletter service, you could be making a mistake that is stunting your money's growth much more than these fluctuations ever will.

Being the Doubting Thomas that I am, I had to see whether he was right and tested exactly how much choosing the right funds for your retirement account can affect your savings. The radical difference surprised me, and I'm confident it will do the same to you.

Prepare to be amazed
It's unfortunate that most employers offer little guidance to employees when it comes to saving for retirement. Sure, a majority of employers sponsor 401(k) plans with a variety of funds, but it's unlikely that they'll help you determine the best home for your money.

Regrettably, your initial 401(k) allocations are usually entwined among a stack of other new-hire paperwork, and more often than not, you hastily assign percentages, turn it in to HR, and forget about it.

Take a look at how much this carelessness could cost you, by comparing the long-term difference between two funds that your employer might offer.

These funds both hold top-notch large-cap stocks, but as you can see, FVDFX has had a return almost 10 percentage points higher over the past three years, and its expense ratio is significantly less -- not to mention that its manager has been in charge for a longer period of time.

Now, would you believe that choosing FVDFX over SRIGX could mean the difference between $1.2 million and $9.4 million?

Let's say you make $90,000 annually and your goal is to save 10% of your salary each year. Your company matches half of the first 6% that you contribute to your 401(k), which you rightly want to take advantage of.

This means that you need to invest $6,300 on your own, which brings the maximum $2,700 from your company's policy. After 30 years, assuming similar three-year returns and deducting expenses, you'd arrive at two utterly different results:

Option No. 2 gives you a portfolio that is more than $8 million higher! This could completely change the way you spend your golden years. On top of that, it would continue to grow, so that your loved ones are left financially secure, when to dust you at last return.

And picking FVDFX over SRIGX is only as simple as taking some time to research thoroughly all of the options contained within your company's 401(k) plan.

Sounds easy, but surely it's not that simple
Finding the right fit for your 401(k) is not at all difficult. There are three aspects to require of any funds you choose.

1. Long manager tenure, preferably five years or more.
2. Low expense ratios, ideally less than 1% annually.
3. A proven, consistent track record while the current manager has been in charge.

FVDFX exhibits all three. It's a stellar fund.

You can quickly pull this data from any financial website. And, believe it or not, comparing these bits of data of the funds that are offered in your 401(k) plan shouldn't take more than an evening or two to complete.  

It might not be the most fun way to spend your night, but when a financially secure retirement is on the line, you owe it to yourself. So take some time to look at your portfolio tonight and see whether there might be a better option for your money than the funds you're currently investing in.

To uncover more tips on how to plan for a wealthy retirement, click here for a free one-month trial of Robert Brokamp's Rule Your Retirement newsletter service. There's no obligation to stay, but with nothing to lose and millions to gain, I'm confident that you'll find it worthwhile.

Fool analyst Adam J. Wiederman won't have a mother-in-law to worry about until Sept. 29 and has no position in any of the securities mentioned above. Bank of America is an Income Investor recommendation. The Fool's disclosure policy can't stand its mother-in-law.