You may feel overwhelmed by the menu of investment
options in your 401(k) plan. After all, how can you choose
one investment from the variety of options your plan provides?
Luckily, you don’t have to. Since
each investment carries its own level and type of risk,
you’ll want to cover your bases and make sure that
no matter where the market leans, your investments will
be protected, at least to some extent, from the market’s
fluctuations. That’s why you’ll want to
diversify,
building your portfolio with a variety of investments —
not just one or two.
If your plan doesn’t match
your contributions, or it provides very limited
investment choices, you may prefer to contribute
less than the maximum to your account. Instead,
you may want to consider putting some
of the money you would have contributed to your
401(k) into a
traditional
or
Roth
IRA,
where you have more flexibility to
invest as you choose.
