Investment Options for a 401(k)
Know and Choose your Retirement Investments
by Jennifer Case
Although each 401(k) plan is unique, all plans share certain features and give you several investment options to choose from.
You can and should diversify your portfolio into high risk and low risk investments. Before selecting a plan, you must decide how much risk you are willing to take with your investments. If you have a few decades of work ahead of you, you can afford to take on more risk than if your retirement will be upon you in a few years.
Explore the website of your 401(k) manager and learn what funds are available to you. Once you have made your portfolio decision, keep an eye on the market. Fluctuations may lead you to make adjustments from time to time. If the funds you choose have symbols, follow them in the indices. This is an easy day-to-day method to keep a general tab of how your investment is progressing.
The Choices
Stock Mutual Funds – Stock mutual funds are invested in various publicly traded stocks. The value of mutual funds can fluctuate dramatically from day to day but in the long term, these funds tend to have strong positive returns.
There are several types of Mutual Funds to choose from. Here are a few options:
- Index Mutual Funds invest in a stock market index such as Dow Jones Industrial Average or Standard & Poor’s 500 Composite Price Index. Because these investments will rise and fall with the market as a whole, they tend to have average returns that are low risk in the long run.
- Growth Mutual Funds invest in firms that tend to have above-average returns and tend to pay dividends. While this is appealing, these funds are also high in risk as they tend to wildly fluctuate.
- Income Mutual Funds invest in stocks that pay regular dividends and provide a monthly income
Bond Mutual Funds – These are investments offered by the government and corporations. They have longer maturity periods and carry higher risk. Standard & Poor’s and Moody’s bond rating services can be useful guides to selecting bonds.
Money Market Funds – These are very low-risk, low-return investments such as U.S. Treasury Bills and Certificates of Deposit.
Guarantee Funds – These funds are backed by insurance firms and provide a fixed interest rate over the long run. They tend to provide consistent growth and are relatively safe.
Final Note
It is important to consider all of the investment options available to you. Any of these options may work for you depending upon your age, risk tolerance, and retirement date. You may want to combine a few of these options. Be sure to do your research before making a decision. Making the proper choices can help ensure that you have enough money for a secure retirement.
Since 1997, CashAdvance.com has been the most established and trusted name in the cash advance industry, connecting over a million consumers with payday loans from its vast network of reliable lenders.
© 2012 CashAdvance.com All Rights Reserved.
CashAdvance.com is Hawk, LLC, which is a limited liability company chartered pursuant to the laws of the Ute Indian Tribe and is wholly owned by enrolled members of the Ute Indian Tribe. By your use of this website you consent to the laws and jurisdiction of the Ute Indian Tribe as it relates directly or indirectly to your use of this website.
Consumer Notice: A cash advance, also referred to as a payday loan or payday advance, is a small, short-term loan that is intended to cover a borrower's expenses until the following payday. Cash advances are intended for short-term financial relief and do not constitute long-term financial solutions. Consumers facing debt and credit difficulties should seek out debt and credit advisory help. Consumers are encouraged to consult our State Consumer Resource pages to learn more about the risks involved with cash advances, local laws and regulations that may be applicable to cash advances, possible loan alternatives and recent developments in their state.
Legal Disclaimer: This website does not constitute an offer or solicitation to lend. CashAdvance.com is not a lender, does not broker loans, and does not make loan or credit decisions. The operator of this Web Site is not an agent, representative or broker of any lender and does not endorse or charge you for any service or product. CashAdvance.com provides a service only and is not acting as a representative, agent, or correspondent for any service provider or lender. CashAdvance.com's aim is to inform users of possible lenders who may be able to satisfy the needs of a particular consumer. CashAdvance.com does not endorse any particular service provider, lender, nor loan product. You are under no obligation to use CashAdvance.com's service to initiate contact, nor apply for credit or any loan product with any service provider or lender. Service providers or lenders will typically not perform credit checks with the three major credit reporting bureaus: Experian, Equifax, or Trans Union. However, credit checks or consumer reports through alternative providers such as Teletrack or DP Bureau, which typically will not affect your credit score, may be obtained by some service providers or lenders, in certain circumstances. You will not be charged any fees to use CashAdvance.com's service. Learn more on our Rates & Fees section.
Availability: Residents of some states may not be eligible for a short term cash loan based upon lender requirements. CashAdvance.com does not guarantee that completing an inquiry form will result in you being matched with a service provider or lender, being offered a loan product with satisfactory rates or terms, nor receiving a loan from a service provider or lender.