How your money is
invested will have an enormous impact on your return, so
it is essential to know your options and educate
yourself in order to make sound and comfortable choices.
The truly great feature of a 401(k) plan is the fact
that you can divide your money, putting it into
different financial vehicles, thus balancing the
investment risks and the relative certainty that some
options may provide.
Fixed Funds.
Fixed Funds, sometimes called
Guaranteed Funds, are known for steady, predictable
growth in the long term. They carry Guaranteed Interest
Contracts underwritten by insurance companies, and
because of that fact are commonly considered very low
risk funds. But low risk also means low, fixed interest
rates, and when offset with inflation – small growth.
Mutual Funds.
Mutual Funds are really great
investment options designed to reduce risk. They allow
small investors to put their money in stocks, bonds and
other various instruments. An average 401(k)
will offer at least a few mutual funds in which you can
invest. In general, you can further divide this
form of investing into the following categories:
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