401k Calculator & Guide
Your 401(k) investment menu determines how the money in your account can be invested. Learn about common options such as mutual funds, index funds, target-date funds, stocks and bonds, along with diversification, risk and investment fees.
A 401(k) plan normally provides an investment menu from which participants can choose investments. The available choices depend on the particular plan.
A 401(k) does not automatically give every participant access to every investment available in the broader market. Your plan establishes the investment options available to participants.
One employer's plan may offer a different selection of funds, investment strategies or account features than another employer's plan.
Depending on plan features, you can generally direct new contributions among the investment choices offered by the plan.
Different investments can have different levels of market risk, diversification, fees and potential returns. Understanding these differences is an important part of retirement planning.
The exact menu varies by plan, but these are among the types of investments participants may encounter.
Funds that invest primarily in stocks. They can provide exposure to companies and equity markets but can also fluctuate in value.
Funds that invest in bonds or other fixed-income securities. Their risk and behavior can differ from stock-focused funds.
Funds designed around an expected retirement year. Their asset allocation generally changes over time as the target date approaches.
Funds designed to track the performance of a particular market index rather than selecting investments primarily through active management.
Some plans offer options designed to provide relatively stable values, subject to the terms, structure and risks of the particular investment.
Some plans provide additional specialized funds or investment options. Always review the specific investment information supplied by your plan.
These categories can overlap. For example, a target-date fund can use index funds as part of its underlying investments.
| Investment Type | Typical Purpose | Potential Benefit | Things to Review |
|---|---|---|---|
| Stock Fund | Equity exposure | Growth potential | Market risk, diversification, fees |
| Bond Fund | Fixed-income exposure | Different risk characteristics from stocks | Interest-rate risk, credit risk, fees |
| Index Fund | Track a market index | Broad or specific market exposure | Index tracked, expenses, tracking difference |
| Target-Date Fund | Retirement-date-oriented allocation | Built-in asset allocation approach | Glide path, fees, underlying investments |
A target-date fund is designed around an approximate future retirement year. Its investment mix typically changes over time according to the fund's stated strategy.
For example, a fund with a target date of 2055 may be designed for someone expecting to retire around that period. The target date does not guarantee a particular account balance or retirement outcome.
This graphic is conceptual. Actual allocations vary by fund, target date and investment strategy.
Investments inside a 401(k) can lose value. Different options can expose your account to different types and levels of risk.
Stocks, bonds and other investments can rise or fall in value. Past performance does not guarantee future results.
Holding too much of a single company, sector or asset category can increase exposure to movements in that particular area.
The amount of time before retirement is one factor investors consider when evaluating investment risk and asset allocation.
Diversification means spreading investments across different assets, companies, sectors, markets or other categories rather than relying on a single investment.
Investment expenses can reduce the amount of money that remains invested in your account. Review the fee information provided by your plan and the individual investments.
A fund's expense ratio represents the fund's operating expenses expressed as a percentage of assets.
A retirement plan can also have administrative or other plan-level expenses. Your plan's disclosures should explain applicable fees and expenses.
Your plan's investment information can help you understand the choices available and their associated costs and risks.
Connect investment choices with diversification, fees, rebalancing and asset allocation concepts.
Explore the fundamentals of investing inside a workplace retirement plan.
Explore Guide → Index InvestingLearn how index funds work and what to review before investing.
Read Guide → Target DateUnderstand target-date strategies and changing asset allocations.
Read Guide → PortfolioLearn why spreading investment exposure can matter in retirement planning.
Read Guide → Fund CostsUnderstand fund expense ratios and how they affect investment costs.
Read Guide → Portfolio ManagementLearn what portfolio rebalancing means and why investors consider it.
Read Guide →Understand how money enters your workplace retirement account.
Explore → Employer MatchLearn how employer matching contributions can work.
Explore → VestingUnderstand ownership of employer contributions.
Explore → CostsLearn about costs that can apply to workplace retirement plans.
Explore → ToolsExplore calculators for contributions, growth, matching and retirement.
View Tools → RetirementConnect your 401(k) investments with broader retirement planning.
Explore →Common questions about choosing and understanding investments inside a workplace retirement plan.
It depends on your employer's plan. Common choices can include stock funds, bond funds, index funds, target-date funds and other investment options selected for the plan.
Not necessarily. Standard 401(k) investment menus often consist primarily of funds and other selected investments. Some plans may offer additional brokerage or self-directed features, but availability depends on the plan.
A target-date fund is an investment designed around a target retirement year. Its asset allocation generally changes over time according to the fund's strategy. The target date does not guarantee a particular investment result.
No. Investment menus vary by plan. An employer may offer index funds, actively managed funds, target-date funds or other choices.
There is no universal number that applies to every investor. The appropriate mix depends on factors such as your investment strategy, time horizon, risk tolerance and the available plan options. Holding more funds does not automatically create better diversification.
A target-date fund is one possible approach to managing a retirement portfolio. Before using one, review its target date, glide path, investment strategy, underlying holdings and fees, and consider whether it fits your circumstances.
Yes. Investment and plan expenses can reduce the amount of money remaining in an account. Comparing applicable fees is therefore an important part of reviewing investment options.
No. Diversification can spread exposure across investments, but it cannot eliminate investment risk or guarantee against losses.
Explore investing, diversification, fees and the other building blocks of a workplace retirement plan.
Explore 401(k) Investing →Clear guides, useful calculators and practical retirement resources to help you understand your 401(k), contributions, employer matching, Roth options, rollovers and long-term savings.
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