401k Investment Questions
If you invest in a 401k or are planning to do so, then you must read our section on the different types of 401k investment options. Each investment option has its own level of risk. The best way to minimize this risk is to diversify your portfolio of investments into both low and high risk. Here is a summary of 3 different types of investors and their profiles:
Ask yourself these questions when choosing your 401k Investment Options:
- Do i know each of these 401k investments in depth, before i invest in any of them?
- Am i diversifying my portfolio of investments? Never put all your $$ into one investment! If your tolerance of risk is high, you can afford to put your $$ into higher interest rate investments with higher risk. However if you cannot afford to lose the principal money, you should invest in low risk options with lower interest rates.
- How many years do I have up until retirement when i will withdraw the $$? If you invest in mutual funds over 10-15 years, you will realize that they perform much better than other investments such as stocks, bonds, etc.
- How has a particular investment performed over
the past several years? Using financial tools like Yahoo Finance, you
can determine via graphs and tables how a particular investment has
performed over past several years: