How Should I Invest My 401(k)?
You have to choose among the investment choices - typically mutual funds - that the plan offers. While your company may give you information about the funds, you'll need to figure out which ones are best for you. Since you're bearing all the risk, it's important that you choose wisely.
When investing for a long-term goal like retirement, you typically want to invest mostly in stocks, which have the best chance to generate returns that outpace inflation. Adding some bonds or cash to your mix can help reduce the volatility of your overall portfolio. See the Investing section for more on investment strategies. You can also use our asset allocator and retirement planner calculators to determine the best mix of stocks, bonds and cash for your retirement money.