Inaya Mclaughlin
401(k) accounts are the best place for retirement investors to start, but a comfortable retirement may require outside investing as well. Deploying investments across a variety of accounts – both taxable and nontaxable – may actually go a long way to ensuring your portfolios are optimized for long-term tax efficiency. Joe Heider, president of Cirrus Wealth Management, says investors shouldn't shy away from setting up an outside investment portfolio, but only once they have maxed out their 401(k) contributions.
| Characteristics | Values |
|---|---|
| 401(k) accounts are the best place for retirement investors to start | Yes |
| A comfortable retirement may require outside investing as well | Yes |
| Deploying investments across a variety of accounts – both taxable and nontaxable – may actually go a long way to ensuring your portfolios are optimized for long-term tax efficiency | Yes |
| Opening a Roth IRA adds distribution diversity because what you contribute is considered after-tax income | Yes |
| Roth IRAs may be particularly useful to younger investors who are starting out a career in a lower income tax bracket than they plan on being in when they retire | Yes |
| Investors shouldn't shy away from setting up an outside investment portfolio, but only once they have maxed out their 401(k) contributions | Yes |
| You typically aren't given the option to pick stocks for your 401(k) | No |
| You will, however, be given the opportunity to make some choices, such as electing a portfolio that is more or less conservative, based on your comfort with risk | Yes |
| If you quit your job, your 401(k) must be moved to another location | Yes |
| There's two basic options | Yes |
| If you're leaving for a new job, and that role offers a 401(k) benefit, then you can roll over your old 401(k) to your new one | Yes |
What You'll Learn
Diversifying 401(k) accounts
K) accounts are the best place for retirement investors to start, but a comfortable retirement may require outside investing as well. Deploying investments across a variety of accounts – both taxable and nontaxable – may actually go a long way to ensuring your portfolios are optimized for long-term tax efficiency. For instance, opening a Roth IRA adds distribution diversity because what you contribute is considered after-tax income. Loewengart says Roth IRAs may be particularly useful to younger investors who are starting out a career in a lower income tax bracket than they plan on being in when they retire.
Joe Heider, president of Cirrus Wealth Management, says investors shouldn't shy away from setting up an outside investment portfolio, but only once they have maxed out their 401(k) contributions. Mike Loewengart, vice president of investment strategy at E-Trade, says 401(k) accounts are the best place for retirement investors to start, but a comfortable retirement may require outside investing as well.
A mutual fund is a pool of money from several unrelated investors. This money is invested into a portfolio of different stocks, bonds, or money market securities. The term “fund” can be applied to most if not all of the investment options you include in your 401(k) plan—that’s why it’s referred to as a “fund lineup.” In your company 401(k) plan, you will want to include a variety of investment options that will allow your employees to properly diversify their 401(k) account, regardless of their age or their investment goals.
There are some types of funds that perform special functions within a 401(k) portfolio, like “index funds.” Trading platforms, tools and support can set investment firms apart. Marc GubertiSept. 10, 2024 · How brokerage account taxes are applied can depend on the type of brokerage account and investment. Coryanne HicksSept. 10, 2024 · Crypto is having a moment in 2024. Here's a look at some top buys. John DivineSept. 10, 2024 · Many natural gas investments aren't for beginners due to their volatility, but they have the potential to outperform the stock market. Marc GubertiSept.
Vanguard funds are a great choice for retirement investing thanks to their low cost structure and high quality. No, because you typically aren't given the option to pick stocks for your 401(k). This is one of the downsides of a 401(k) plan: less control over your investment portfolio. You will, however, be given the opportunity to make some choices, such as electing a portfolio that is more or less conservative, based on your comfort with risk.
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401(k) plan investment options
A 401(k) plan is a retirement savings plan that allows employees to invest a portion of their paycheck prior to taxes being taken out. 401(k) plans typically offer a variety of investment options, including mutual funds, which are pools of money from several unrelated investors that are invested into a portfolio of different stocks, bonds, or money market securities.
When choosing investment options for a 401(k) plan, it's important to include a variety of investment options that will allow employees to properly diversify their 401(k) account, regardless of their age or their investment goals. Some types of funds that perform special functions within a 401(k) portfolio include "index funds".
K) plans typically offer a variety of investment options, including mutual funds, which are pools of money from several unrelated investors that are invested into a portfolio of different stocks, bonds, or money market securities.
When choosing investment options for a 401(k) plan, it's important to include a variety of investment options that will allow employees to properly diversify their 401(k) account, regardless of their age or their investment goals. Some types of funds that perform special functions within a 401(k) portfolio include "index funds".
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401(k) vs. stock-picking
K) accounts are the best place for retirement investors to start, but a comfortable retirement may require outside investing as well. Deploying investments across a variety of accounts – both taxable and nontaxable – may actually go a long way to ensuring your portfolios are optimized for long-term tax efficiency. For instance, opening a Roth IRA adds distribution diversity because what you contribute is considered after-tax income. Loewengart says Roth IRAs may be particularly useful to younger investors who are starting out a career in a lower income tax bracket than they plan on being in when they retire.
A 401(k) plan is one of the best ways to save for retirement, but it is important to diversify your portfolio and not invest all of your retirement savings in a 401(k) plan. Joe Heider, president of Cirrus Wealth Management, says investors shouldn't shy away from setting up an outside investment portfolio, but only once they have maxed out their 401(k) contributions.
K) accounts are the best place for retirement investors to start, but a comfortable retirement may require outside investing as well. Deploying investments across a variety of accounts – both taxable and nontaxable – may actually go a long way to ensuring your portfolios are optimized for long-term tax efficiency. For instance, opening a Roth IRA adds distribution diversity because what you contribute is considered after-tax income. Loewengart says Roth IRAs may be particularly useful to younger investors who are starting out a career in a lower income tax bracket than they plan on being in when they retire.
A 401(k) plan is one of the best ways to save for retirement, but it is important to diversify your portfolio and not invest all of your retirement savings in a 401(k) plan. Joe Heider, president of Cirrus Wealth Management, says investors shouldn't shy away from setting up an outside investment portfolio, but only once they have maxed out their 401(k) contributions.
K) accounts are the best place for retirement investors to start, but a comfortable retirement may require outside investing as well. Deploying investments across a variety of accounts – both taxable and nontaxable – may actually go a long way to ensuring your portfolios are optimized for long-term tax efficiency. For instance, opening a Roth IRA adds distribution diversity because what you contribute is considered after-tax income. Loewengart says Roth IRAs may be particularly useful to younger investors who are starting out a career in a lower income tax bracket than they plan on being in when they retire.
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Optimizing investment portfolios
K) accounts are the best place for retirement investors to start, but a comfortable retirement may require outside investing as well. Deploying investments across a variety of accounts – both taxable and nontaxable – may actually go a long way to ensuring your portfolios are optimized for long-term tax efficiency. For instance, opening a Roth IRA adds distribution diversity because what you contribute is considered after-tax income. Loewengart says Roth IRAs may be particularly useful to younger investors who are starting out a career in a lower income tax bracket than they plan on being in when they retire.
Joe Heider, president of Cirrus Wealth Management, says investors shouldn't shy away from setting up an outside investment portfolio, but only once they have maxed out their 401(k) contributions. A mutual fund is a pool of money from several unrelated investors. This money is invested into a portfolio of different stocks, bonds, or money market securities. The term “fund” can be applied to most if not all of the investment options you include in your 401(k) plan—that’s why it’s referred to as a “fund lineup.” In your company 401(k) plan, you will want to include a variety of investment options that will allow your employees to properly diversify their 401(k) account, regardless of their age or their investment goals.
There are some types of funds that perform special functions within a 401(k) portfolio, like “index funds.” You will, however, be given the opportunity to make some choices, such as electing a portfolio that is more or less conservative, based on your comfort with risk. If you quit your job, your 401(k) must be moved to another location. There's two basic options. If you're leaving for a new job, and that role offers a 401(k) benefit, then you can roll over your old 401(k) to your new one. Trading platforms, tools and support can set investment firms apart. Marc GubertiSept. 10, 2024 · How brokerage account taxes are applied can depend on the type of brokerage account and investment. Coryanne HicksSept. 10, 2024 · Crypto is having a moment in 2024. Here's a look at some top buys. John DivineSept. 10, 2024 · Many natural gas investments aren't for beginners due to their volatility, but they have the potential to outperform the stock market. Marc GubertiSept. 10, 2024 · Vanguard funds are a great choice for retirement investing thanks to their low cost structure and high quality. Coryanne HicksSept.
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Setting up outside investment portfolios
K) accounts are the best place for retirement investors to start, but a comfortable retirement may require outside investing as well. Deploying investments across a variety of accounts – both taxable and nontaxable – may actually go a long way to ensuring your portfolios are optimized for long-term tax efficiency. For instance, opening a Roth IRA adds distribution diversity because what you contribute is considered after-tax income. Loewengart says Roth IRAs may be particularly useful to younger investors who are starting out a career in a lower income tax bracket than they plan on being in when they retire.
Joe Heider, president of Cirrus Wealth Management, says investors shouldn't shy away from setting up an outside investment portfolio, but only once they have maxed out their 401(k) contributions.
A mutual fund is a pool of money from several unrelated investors. This money is invested into a portfolio of different stocks, bonds, or money market securities. The term “fund” can be applied to most if not all of the investment options you include in your 401(k) plan—that’s why it’s referred to as a “fund lineup.”
In your company 401(k) plan, you will want to include a variety of investment options that will allow your employees to properly diversify their 401(k) account, regardless of their age or their investment goals.
Trading platforms, tools and support can set investment firms apart. Marc GubertiSept. 10, 2024 · How brokerage account taxes are applied can depend on the type of brokerage account and investment. Coryanne HicksSept. 10, 2024 · Crypto is having a moment in 2024. Here's a look at some top buys. John DivineSept. 10, 2024 · Many natural gas investments aren't for beginners due to their volatility, but they have the potential to outperform the stock market. Marc GubertiSept. 10, 2024 · Vanguard funds are a great choice for retirement investing thanks to their low cost structure and high quality. Coryanne HicksSept.
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Frequently asked questions
A 401(k) plan is a retirement savings plan that allows employees to save for their retirement through tax-deferred investments.
An investment portfolio is a collection of financial assets such as stocks, bonds, and mutual funds that an investor owns.
A 401(k) plan is a type of investment portfolio, specifically a retirement savings plan that allows employees to save for their retirement through tax-deferred investments. However, a 401(k) plan is typically less flexible than an outside investment portfolio, as it does not allow investors to pick stocks but rather elects a portfolio that is more or less conservative based on the investor's comfort with risk.
