Mentally Gain Control Over Your 401k Options

Investment instruments come in a variety of shapes and sizes, and it can be extremely difficult not to feel overwhelmed by the full array of options. Many companies offering 401k benefits to their employees help to streamline the process by choosing one 401k management company to select the investment options that the 401k portfolio can then be diversified into. Even with this more narrowed choice of offerings, it is still possible to be overwhelmed by the plethora of instruments that can be utilized.

Understanding 401k Options

You can easily gain control over your 401k plan by using some basic common sense. Initially, you should decide how much time and effort you really want to put into the portfolio diversification. Like with any type of investment, there are a variety of levels based on the skill set and dedication of the investor.

Setting Target Date

If you have better things to do with your time, selecting a target-retirement fund (aka target-date or target-maturity fund) may be a wise choice. 401k investors just need to select a fund that best works with their impending retirement date and the plan manager would manage the remaining details.

Perhaps you do not want to leave the entire fate of your 401k investments in the hands of the manager, then you can gain a little more control by  selecting a strategy that allows you to control the overall asset allocation but let someone else actively manage your choices.

Due Diligence

You can also take the time to conduct due diligence and independently research and decide on which funds you would like to select from the list of offerings provided by your company. Or, you can check with your employer to see if they will actually allow you to blaze your own trail by using their self-directed brokerage option.