Broker Check

Where is Your Money Going Inside Your 401(k)?

June 15, 2022

A 401(k) is a common savings tool for many working Americans. It’s an easy way to save and generally comes with the benefit of employer matching. But are you really clear on where your money is invested and if it’s the optimal place for your stage in life?

It’s time to look at the makeup of most 401(k)s.

Mutual Funds and, more recently, Exchange Traded Funds (ETFs) are the most common investment options found in a 401(k) package. And within these, the options range in risk level, helping you decide which options to choose. As your life changes—be it age, income, or family size—so can your 401(k), so take time to review it occasionally.

Conservative Funds: Need an investment option that minimizes risk? Start here. These funds are typically predictable and slow-growing, offering some level of confidence that your money will be there when you need it.

Value Funds: Start in this category if you’re interested in a business offering dividends. These funds are typically comprised of undervalued companies that need investors that are willing to accept a level of risk and are looking for a dividend when the business succeeds.

Balanced Funds: This is your middle-of-the-road option that puts your money in a variety of both stocks and bonds. The higher-risk stocks are balanced out by the conservative bonds making this less risky while still encouraging growth.

Aggressive Growth Funds: If you’re in a place in life that’s able to jump on a rollercoaster ride in hopes of a payout, then the high risk with these funds might be your place to focus. These funds take a leap of faith, and sometimes you see a big payday but be prepared for the loss if the company crashes unexpectedly.

Specialized Funds: If you like to cherry-pick from a list of particular industries, then take a peek at the ones offered in your 401(k). From innovative tech to big pharma, you can select the market that interests you most—it just might be worth keeping an extra-watchful eye on the specific companies included.

Target Date Funds: If you have a retirement date in mind, then this option may allow you to maximize your investment based on that timeframe. The fund automatically rebalances investments moving away from high-risk and closer conservative funds as you approach your retirement date.

If the option to save using a 401(k) is one you have, it might be time to review your selections or start investing if you haven’t already. We think it’s important to check if what you’re doing aligns with your financial strategy, so please call our office today.


This document is for educational purposes only and should not be construed as legal or tax advice. One should consult a legal or tax professional regarding their own personal situation. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products offered by an insurance company. They do not refer in any way to securities or investment advisory products Insurance policy applications are vetted through an underwriting process set forth by the issuing insurance company. Some applications may not be accepted based upon adverse underwriting results.  Death benefit payouts are based upon the claims paying ability of the issuing insurance company. The firm providing this document is not affiliated with the Social Security Administration or any other government entity.

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