From
Your Perspective:
Making sense of your 401(k) investments
Brokerage accounts
Some 401(k) plans allow you to invest in
stocks, bonds, or mutual funds of your choosing, as well
as the funds and company stock that are part of the plan’s
menu. With this option, you trade through a designated
brokerage
account,
just as you would with a brokerage firm outside
the plan.
Maintaining a brokerage account usually
carries a modest annual fee — in the range of $25
to $175, depending on the firm. You may also pay transaction
costs and commissions on each trade you make. Chances are,
if you welcome the opportunity to invest your 401(k) money
any way you want, you’ll consider these charges worth
the price.
Pros
and cons of brokerage accounts
Pros
Experienced investors can select their own investments Greater opportunity for diversification among asset classes
Cons
Too many options can be confusing or intimidatingEmployees may lack sufficient information to make smart decisionsParticipants may be tempted to try short-term, or day trading
