Fidelity 401K Investment Options: What You Need To Know

Introduction

401k is a retirement savings plan that is offered by many employers in the United States. A 401k plan allows employees to save and invest a portion of their salary before taxes are taken out. One of the most popular providers of 401k plans is Fidelity Investments. In this article, we will discuss the various investment options available to you through Fidelity 401k.

Types of Investment Options

Fidelity offers a variety of investment options for individuals who have a 401k plan through their employer. These investment options can be broadly classified into three categories: mutual funds, target-date funds, and individual stocks and bonds.

Mutual Funds

Mutual funds are a popular choice for 401k investors because they offer diversification and professional management. Fidelity offers a wide range of mutual funds, including index funds, actively managed funds, and sector-specific funds. Index funds are a popular choice because they are low-cost and provide exposure to a broad range of stocks and bonds.

Target-Date Funds

Target-date funds are designed to be a one-stop-shop for retirement investors. These funds are designed to automatically adjust the asset allocation as the investor approaches retirement age. Fidelity’s target-date funds are available in five-year increments and range from 2005 to 2065.

Individual Stocks and Bonds

For investors who want more control over their investment portfolio, Fidelity also offers the option to invest in individual stocks and bonds. This option requires more research and monitoring, but it can also provide higher potential returns for those who are willing to take on the risk.

Fees and Expenses

It is important to be aware of the fees and expenses associated with each investment option. Fidelity offers low-cost options, such as index funds, but actively managed funds and individual stocks and bonds may have higher fees. Additionally, there may be administrative fees associated with the 401k plan itself.

Risk and Return

Investing always involves risk, and it is important to understand the risk and return potential of each investment option. Generally, stocks and mutual funds have higher potential returns but also higher risk, while bonds and target-date funds have lower potential returns but lower risk.

Choosing the Right Investment Option

Choosing the right investment option for your 401k plan depends on your individual financial goals and risk tolerance. It is important to consider your investment timeline, retirement goals, and overall financial situation when making investment decisions.

Conclusion

Fidelity offers a wide range of investment options for individuals who have a 401k plan through their employer. Whether you prefer mutual funds, target-date funds, or individual stocks and bonds, Fidelity has an option that can meet your needs. Be sure to consider the fees, risks, and potential returns of each option before making investment decisions.

People Also Ask

What is a 401k?

A 401k is a retirement savings plan that is offered by many employers in the United States. It allows employees to save and invest a portion of their salary before taxes are taken out.

What are the benefits of investing in a 401k?

Investing in a 401k offers several benefits, including tax-deferred growth, employer matching contributions, and the ability to save for retirement.

What is the difference between a mutual fund and a target-date fund?

A mutual fund is a collection of stocks and bonds that is managed by a professional portfolio manager. A target-date fund is a type of mutual fund that is designed to automatically adjust the asset allocation as the investor approaches retirement age.