What’s the right investment mix of retirement funds?


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The plan administrator has given me the option of a growth and income fund that is “managed exclusively for the fund.” There’s no ticker symbol. How can I vet the fund with an independent rating site? And are those funds common in 401(k)s?  —D.S., address not disclosed Almost half of the assets in 401(k) plans aren’t invested in mutual funds, according to the Investment Company Institute, a mutual-fund industry trade group. Increasingly, assets are invested in products that aren’t always as transparent as mutual funds. Your plan may have chosen to replace your fund with what’s known as a collective investment, which is managed by a trust or a bank, perhaps to reduce overall costs. Although you might not have access to the day-to-day performance of those replacements, the Department of Labor still requires 401(k) providers to furnish participants with certain performance data and costs.
For full version, visit http://consumerreports.org/cro/news/2013/08/investigating-401-k-investment-choices.htm

When choosing where to invest my 401(k), I put 70 percent in an index mutual fund that is tied to the S&P 500. The remaining 30 percent I put in index funds tied to international, small-cap, and mid-cap stocks. I’m in my late 40s; do you think this is a smart move?—A.T., Arlington, Texas We don’t think that anyone should have 100 percent of his or her 401(k) money invested in stocks, because a more diversified portfolio will help protect it from getting pummeled in economic downturns. If you were in your 20s you could afford to be heavily invested in stocks, but as you get closer to retirement you should probably shift to a more conservative, bond-centric portfolio. Many people in their 40s should consider placing about 30 percent of their investments in bonds. To achieve this you could take roughly half of the money you have invested in the S&P index fund and move it into a low-cost index bond fund.
For full version, visit http://consumerreports.org/cro/news/2013/08/retirement-funds-invstent-mix.htm

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