If you work for a company that offers a 401(k), you were probably given a list of investment options when you decided to participate in the plan. If the plan is a good one, your investment options should include a wide range of funds -- large cap funds, small cap funds, value funds, growth funds, international funds, real estate, and bond funds with short durations, long durations and the ability to invest in high yield. And, if you are really lucky, you have access to funds with very low expenses.
Unfortunately, for far too many plan participants, the investment choices are very limited and the fees built into the funds are quite high. If you find yourself in one of those plans, you should ask the plan administrator if a "self-directed" option is available. With a self-directed brokerage option, the plan participant is free to invest the money in the plan virtually any way they want -- just like they can in their Individual Retirement Accounts (IRAs).
According to the Plan Sponsor Council of America, about 20 percent of plans offer this option. If you've never heard about the availability of this option, it doesn't mean you don't have it. Many plans that offer the option don't advertise it very widely or when they do, participants are unfamiliar with the terminology so they don't know that they have the option to choose the investments themselves. If this is something that you are interested in, you should ask the plan administrator directly.
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