Evaluating new fund options in a 401(k) plan
Decide between a 1-fund or multifund solution
Target-date funds, asset allocation funds or life cycle funds are popular choices in retirement plans because they allow consumers to automate their investing strategy and forget the headaches associated with selecting and managing a portfolio of appropriate fund options. "The question becomes, do you want to pick funds, or would a risk-based or life cycle fund, an all-in-one solution, work better for you?" says Nauta.
These funds aren't risk-proof, and they vary widely in the types of funds they hold and the ways they manage asset allocation in the years leading up to and during retirement. But they do solve the problem of selecting and monitoring a larger group of funds on an ongoing basis, Nauta says.
Maximize your 401(k), and retire in style
No matter where you are in your career, be sure to make the most of your workplace retirement plan.