A 401(K) is a type of retirement savings plan that is sponsored by an employer. It allows for workers to save and invest a part of their paycheck for the purpose of retirement savings. Taken out before taxes, the money is not taxed until it is taken out of savings. The best 401K plans give people complete control over how their money is invested. Plans offer a spread of mutual funds made up of stocks, bonds and money market investments. This savings account is usually managed by outside administrator, rather than the actual employer. But the amount you put in can be up to you. Generally you should put as much money in as possible while being mindful of what you need to survive. But choosing the right investments can be a bit of a challenge if you don’t know where to start looking. With that said, read on to learn more about the top 401(K) investments.
Vanguard 500 Index
The Vanguard 500 Index is a great option for any 401K plan. It is an Indexed Large-Cap investment that provides a diversified portfolio to investors. Vanguard is also a great option for anyone interested in a 401k to IRA rollover. As the name implies, it is made up of 500 companies like Apple Inc. and the Exxon Mobil Corporation. The Vanguard 500 Index is a low-cost option and features companies that make up three-fourths of the US Stock market value. Currently the cost is just a little over $200 and the expense ratio is around .16%. The minimum investment is $3,000, and while it does come with its fair share of risk, it may be well worth the investment.
- $3000 minimum investment
- Low-cost option
- Provides a diversified portfolio
The Fidelity Contrafund is a perfect 401k retirement plan for those looking to build around a large-cap fund. Actively managed, the Contrafund has a unique combination of below-average expenses while featuring an experienced manager. Having been in the business for over 25 years, the Contrafund’s manager has outperformed his competitors consistently with a return of as much as 8%. The Contrafund features an expense ratio of .71% and a turnover rate of 45%, and features a total of over $74,000 in assets. Best of all, this 401(K) fund only comes with moderate risk with each share at a dollar value of just a little over $100. The minimum required amount to invest is $2,500.
- Has been managed well for over 25 years
- Over $74,000 in assets
- $2,500 minimum investment
T. Rowe Price Spectrum Income
No 401K retirement plan would be complete without the T. Rowe Price Spectrum Income fund. It is a brilliant alternative to a typical U.S. bond index fund, working as a multi-sector bond fund. It offers a high-yield opportunity, and uses international bonds, as well as U.S. Treasury and U.S. corporate bonds. Providing a diverse portfolio, the fund comes with its fair share of risk. Nevertheless, the potential for higher returns may far outweigh the risks. The 10-year return is around 5%, while the daily return is around 7%. The current dollar value of a share is around $12. Overall the total assets amount to $6,259,310 which is quite high.
- High-yield opportunity
- High-risk investment
- Multi-sector bond fund
401K retirement investments are essential for your financial security going into retirement. Provided you make the right investments, your retirement investments can provide you with the retirement you’ve always wanted. No matter the investor, there are a ton of great options out there that just require a little research. Though some funds come with a ton of risk, they may produce a greater return later down the line. But if you are more comfortable there are plenty of investments that only provide moderate to low level risk to investors.