Can You Invest In Apple Stock Through Your 401(k)?

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Putting a portion of your income into a 401(k) is an excellent way to save for retirement. Unlike other individual retirement accounts, however, 401(k) plans have some limitations on how you can invest your money.

If you’re hoping to diversify your retirement contributions into stocks like Apple (AAPL), it might not be as easy as buying the stock outright, but it is possible.

What Is a 401(k)?

A 401(k) is a tax-advantaged retirement fund into which employees can contribute a percentage of their income before they pay taxes on it. One significant advantage of a 401(k) is an employer match, in which your employer matches your contributions — essentially giving you free money by adding to the amount you put into your 401(k).

You can invest the money in your 401(k) over time and grow it without paying capital gains taxes. When you withdraw from your 401(k) in retirement, you must pay taxes based on your tax bracket at that time. 

For those who think they’ll pay less in taxes in the future than they currently do, a 401(k) can be a great tool to build retirement savings. The employer match also makes a 401(k) an attractive option. But if you want the freedom to make your own investment decisions, be mindful of your 401(k) investment options.

401(k) Investment Options

How your 401(k) investments work depends on your employer’s preferences. In some cases, employers take on all the responsibility for where contributions go, either by deciding on the investments themselves or by hiring a money manager to choose options.

Employers may also give their employees partial control to decide where to invest their contributions. In this scenario, you can’t invest freely in whatever stocks and assets you wish. Instead, you will be given several options, such as mutual funds and exchange-traded funds (ETFs). 

How To Buy Into Apple Stock With Your 401(k)

You likely won’t be able to purchase Apple stock on its own to include in your 401(k). But if your employer allows you to decide how to invest your 401(k) contributions, mutual funds and ETFs are the two ways to buy in. 

Mutual funds are investment vehicles that combine money from multiple people to invest in a portfolio made up of diversified assets, such as stocks and bonds. Mutual funds are actively managed, meaning a professional fund manager makes key decisions on how to improve a fund’s performance. An actively managed fund might lead to better results, but it also comes with higher fees than other funds like ETFs.

ETFs are similar to mutual funds in that they take investments from a group of people and pool them together to buy into multiple stocks. Unlike mutual funds, ETFs are passively managed, meaning they track different types of assets or indexes. Because of this, ETFs have fewer fees than mutual funds, but they also have a lower chance of outperforming the market.  

To put your money into Apple, determine which mutual funds and ETFs in your specific 401(k) plan include Apple as a holding and then invest in one or more of them. Some mutual funds that include Apple stock are the JPMorgan Large Cap Growth Fund (OLGAX) and Fidelity Contrafund (FCNTX). Popular ETFs that include Apple as one of the top holdings are iShares U.S. Technology ETF (IYW) and Technology Select Sector SPDR Fund (XLK).

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