The decision to manage your 401(k) investments should not be made lightly. These pros and cons will help you determine if it’s for you.
No matter which type of 401(k) plan you have, you are responsible for your investments, even when your choices are limited to a short menu of mutual funds. Within a mutual fund, of course, you have no say over which securities are bought and sold.
Even if you do have plenty of choices for your 401(k), you may seek the advice of a financial advisor to help you decide where to put your money. That will help, but even with an advisor, you are still limited to your company’s menu of choices. And then, of course, there’s the fact that professional fund managers regularly underperform the market.
All of which increases the temptation for those wise to the ways of the market – you, perhaps? – to choose their 401(k) plan’s self-directed or brokerage window option and take over management of their 401(k) plan themselves. (For more, see The Rise of 401(k) Brokerage Accounts.) If your company’s plan has this feature, should you choose it?
There are several important factors that could push you in a do-it-yourself direction.
More Choice. With a self-directed plan, you have many more investment choices. In addition to mutual funds, your portfolio could include exchange traded funds (ETFs), individual stocks, bonds and even non-traditional options, such as real estate.
Read more: Managing Your Own 401(k): Pros & Cons | Investopedia http://www.investopedia.com/articles/personal-finance/032616/managing-your-own-401k-pros-cons.asp#ixzz44DEm6zvb
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