From
Your Perspective:
Making sense of your 401(k) investments
Making sense of
your 401(k) investments
Once you’ve decided to enroll in your company’s
401(k)
plan, you’ll have to decide how to invest the money you’re
putting into your account. Your investment choices can have
a major impact on the value of your account and how much income
you can expect your plan to provide after you retire.
Every 401(k) plan lets you decide how to
allocate
your contributions among the plan’s offerings. Some plans
also let you decide how to invest any contributions your employer
makes. Other plans let your employer decide how to direct any
matching
contributions, which includes the right to invest the match
in company stock.
The average 401(k) plan offers 10 to 12 investment
choices, although some plans offer 100 or more. Typically, plans
offer a combination of mutual funds, stable value investments
(including
guaranteed
investment contracts
and
money
market funds),
and company stock.
Some plans provide access to
brokerage
accounts,
called
windows,
through which employees can purchase
individual stocks and bonds as well as mutual funds.
How you
allocate
your portfolio can make a major difference in how
quickly your contribution may increase in value, and
the amount of income your plan will provide after
you retire.
