401k which mutual fund

If you have access to an international bond fund, you might put a bit of your savings in there to diversify globally. Expense ratios are the fees carried by investments, and they range widely. You might find your k offers only one choice in some of the above categories, but when you have a selection, you should generally pick the lowest-cost option — often an index fund.

Even small differences in fees can have a huge effect over time. One is a target date fund, available in virtually all k s. These funds have a year in their names, designed to correspond to the year you plan to retire.

You put all of your k money in this fund, which diversifies for you and automatically takes less risk as you approach that year. Another option, which may be superior to a target-date fund, is a robo-advisor or an online planning service.

Some of these companies, like Blooom, manage your k at your existing provider, setting your asset allocation and automatically rebalancing. Online planning services, including many of the ones on our list of best financial advisors , offer low-cost access to human advisors and provide comprehensive guidance on your finances, including how to invest your k.

How to Prioritize Saving and Investing Goals. Come to terms with risk. Weigh your investment options. Learn More. Fees 0. Fees Varies by advisor. Promotion None no promotion available at this time.

I recommend you complete this process annually — because mutual fund companies can make periodic changes to their share classes. Mutual fund fees increase the cost of investing for k participants. They fall into one of two general categories — shareholder fees and operating expenses. Shareholder fees apply to individual investor transactions and account maintenance, while operating expenses cover regular and recurring fund expenses. The good news?

Mutual funds are obligated by law to disclose these fees in their prospectus. Further, mutual funds usually disclose this information for all share classes in a single prospectus. These factors make it easier for employers to evaluate share class fee differences. These additional fees are then paid out to various k plan service providers. There are two general forms:. Revenue sharing is more common with actively-managed mutual funds than their passively-managed counterparts i.

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I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Part Of. Know the k Rules. How k s Work. Roth k s: The Alternative. Other Types of k s. How Much Should You Contribute? Making Money With Your k. Getting Money From Your k.

Rolling Over Your k. Retirement Planning K. Table of Contents Expand. Fund Types Offered in k s. What to Consider Before Investing. Decisions About Diversification. How Much Should I Invest? Extra Benefits for Lower-Income Savers. After Establishing the Plan. Take Your k With You. The Bottom Line. Key Takeaways k plans typically offer mutual funds that range from conservative to aggressive. Avoid funds with high fees. Be sure to diversify your investments to mitigate risk.

Once you have established a portfolio, monitor its performance and rebalance when necessary. Article Sources. Investopedia requires writers to use primary sources to support their work.

These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.

This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Articles. Partner Links. Related Terms Retirement Planning Retirement planning helps determine retirement income goals, risk tolerance, and the actions and decisions necessary to achieve those goals.

Retirement Contribution Definition A retirement contribution is a payment into a retirement plan, either pretax or after tax. What Is a b Plan? A b plan is a tax-advantaged retirement savings plan for teachers, nurses, and other employees of nonprofits and government agencies.

How Does a Pension Plan Work? A pension plan is an employee benefit that commits the employer to make regular payments to the employee in retirement. Deferred Compensation Deferred compensation is when part of an employee's pay is held for disbursement at a later time, usually providing a tax deferred benefit to the employee.

Unemployment Compensation Amendments of The Unemployment Compensation Amendments of allow a terminated employee to roll over employer-sponsored retirement savings to another account.