My 401(k) plan doesn’t offer many investment choices (mostly large-cap stock funds) and the fees are high. What are my options for making the best investments?

Our first suggestion would be to contact your employer and suggest they reach out to a firm like Buckingham to do an independent review of their 401(k) plan. This review addresses costs, fund performance and ability for participants to effectively diversify their 401(k) plan.

If that option is not available, 401(k) participants should review the costs of the funds, the internal turnover of stocks within the funds and the number of stocks owned by the funds. Participants should avoid funds that have a low number stocks (less than 100 for large-company funds and less than 500 for small-company funds), have high turnover of the stocks within the funds and high fees. Plans often have a low cost S&P 500 Index fund and some low-cost short-term bond funds. Participants can use these two options to build a portfolio around their investments outside of their plan, where they have access to lower-cost passive funds.

This portion of Buckingham's Web site offers an interactive dialogue with Buckingham investment professionals and other personnel. It is important to recognize that many factors, including but not limited to time and changing market conditions, may cause such discussion to no longer be reflective of current thinking, positions or recommendations. Additionally, it is important to recognize that the information provided is for general educational purposes only and in no way is intended to viewed as, or a substitute for, personalized investment advice. Buckingham does not provide legal or tax advice you should consult with an investment professional, as well as legal and tax counsel regarding your specific financial circumstances.

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