by AAA » Thu 21 May 2009, 12:02:59
$this->bbcode_second_pass_quote('gnm', 'M')ost people are given incentives (employer matching etc) to "invest" via a 401k and don't have a lot of leeway within that (managed funds) - Few have a lot of extra beyond that to "play" with...
-G
I guess I somewhat agree.
Most 401k accounts I have seen allow participants to choose from several different funds, money market or cash equivalent, or buy individual stocks. They obviously charge commsions for trades and funds have expense ratios.
I choose cash with no expense ratio and currently yielding 5.25% interest and then I also choose the S&P 500 fund due to its broad US diversification and its low expense ratio. Everyone once in a while I will move money into an International Fund but it does have a higher expense ratio. I DO NOT trade in my retirement account. I cannot risk losing that money.
To my knowledge no 401k accounts require employees to participate. So if they wanted to they could easily open a Roth IRA or Traditional IRA. I suggest the ROTH since you won't have to pay taxes on the returns and you can withdraw the principal anytime before you retire.
Many 401k providers do match a small percentage. That is FREE money as long as you are vested.