October 18, 2014

When someone asks you what the default fund is with your 401(k), what are they asking? Can you move the money? Why would you?

2 thoughts on “October 18, 2014”

  1. Garrett Haag says:

    Your default fund in your 401k is the fund that the money goes to when you have not changed anything, if you just have the person at work set up your 401k this is likely the fund that it is in, normally the fund is less aggressive then you would want. You can move the money or set up a different account that your money goes in to each cycle if you want. You should care about this because the default fund may not be very good, it could be higher fee and less return then a different fund you could get. You always want to look at what you have available.

  2. Mike Finley says:

    Well said, Garrett. Let’s review.

    Many plans put you in a default fund that is very safe and with little risk. This will not serve your needs in the future. Get out of those safe funds and start taking some risk! Select a target date fund that fits your retirement years (make sure the expense ratio is low) or select index funds that track big markets like the entire U.S. economy or most of the international economy. Total Index are the words you are looking for when selecting that kind of fund.

    That retirement fund is YOURS. See what you are invested in, move it as needed and send your future contributions to the funds that will actually grow your money over time. Onward!

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