Question by Yay Ah!: Generally speaking, do most 401k plans allow the participant to invest in individual stocks?
And by individual stocks, I don?t mean the company?s stock. I?m talking about non-employer stocks traded on an exchange.
In addition, do most 401k plans allow the participant invest in any mutual fund of his/her choice? Or do most 401k plans offer only a limited mutual fund selection?
*I know plans vary. But, this is just a general question.
Best answer:
Answer by Sean Roberts
Adam,
A 401K is like a shopping cart in a supermarket. You can buy any type of investment from a stable stock such as Exxon to a speculative venture capital stock, to a mutual fund, to a corporate bond, to a municipal bond, or anything else. I would advise you to diversify your portfolio as much as possible. You are not obligated to buy stock in your employer?s company.
A 401K is handled by a third party investment firm. Your company only knows how much you have contributed to your 401K, but not what you bought with it.
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