Money Power: 401(k) investment choices numerous
BY JANE BENNETT CLARK Money Power
Sunday, February 17, 2013
2/17/13 at 4:11 AM
Companies offer an average of 19 choices in their 401(k)s. But the number can go as high as 70 or even 100 - a selection that you may find overwhelming.
Take a deep breath. Whatever the menu, you'll likely see actively managed domestic and international stock funds and bond funds as well as at least one index fund and a money market fund. Most plans also offer a series of target-date funds, which start with mostly stocks and ease into bonds and cash as they get closer to the target date.
The general rule is to load up on stocks while you're young and have time to weather a few downturns and move to less-risky investments over the ensuing decades.
"If you're in your 20s and have a relatively high risk tolerance, you could be 90 percent in stocks, with a 10 percent bond weighting," says Gil Armour, a certified financial planner in San Diego. "Someone who is very close to retirement should have a portfolio of about 50 percent stocks and 50 percent bonds."
Still can't put together your own portfolio? Go with a target-date fund. Target-date funds have become the investment of choice not only for employers as a default but also for experienced investors who like the convenience.
Original Print Headline: 401(K) Investment Choices Numerous
Jane Bennett Clark is a senior editor at Kiplinger's Personal Finance magazine. To send her a question or comment, go to tulsaworld.com/kiplingerfeedback.