How to manage 401k?

31st Oct 2009 by Joseph Pousada

The first step to managing your 401k plan is to get information from your plan administrator about your investment options or even better the parameters in which you can invest. Many prototype plans will offer only a list of investment companies that you can invest in, a money market and maybe the company stock. Most of the investment company companies you can invest in are in a special class of shares that are for retirement plans alone and some may be proprietary funds. Even with all these limitations, get all information you can gather on the investment objectives of these funds, all associated fees (including 12b1fees) and get a copy of the prospectus. Have your financial advisor review them and sit down and make a decision based on a comprehensive strategy. You may discover one of the investment companies has a focus on blue chip a great performance history and reasonable fees but high turnover in assets and will distribute quite often. After reviewing with your financial advisor you may decide together that this would be beneficial to hold in the 401k retirement plan because all distributions grow tax deferred. If you work for a firm that has a customized plan you may discover you are able to buy equities, sell covered calls, buy rights, various mutual funds and corporate bonds. Find out what your investment parameters are and come up with a plan with your financial advisor.

This answer is the subjective opinion of the writer and not of FinancialAdvisory.com