Apr 30, 2019
The theme for this week is how to pick the right investments in your 401k plan. I’m kicking off this week with the most common advice that I give to most 401k participants that I work with - just pick the target-date fund.
Most 401k plans these days have a target date retirement fund. You pick the fund that corresponds with the year closest to your retirement, and that’s it. The target date fund is aligned with your stage in life, and will maximize the growth while your young, then gradually reduce your risk and percentage in stocks as your approach retirement. It rebalances for you, and it’s basically on auto-pilot.
These funds were created as the easy button for investing in your 401k and they work great for most of us, because many people don’t have the knowledge, skillset, desire, or time to keep up with their investment portfolio in the way that they should, and since you’re kind of on your own when it comes in picking funds in your 401k, and you usually don’t have an advisor to just take care of everything for you, the target-date fund is the next best thing.
So if you have cobbled together an investment lineup that you’re not really paying attention to, and your plan offers a target-date series of funds, consider that option instead.
That’s it for today, Thanks for listening!
Tomorrow, come on back, because I’m going to share with you when you wouldn’t want to invest in target date funds, and what you may want to consider instead.
My name is Ashley Micciche and this is the One Minute Retirement Tip.
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