Participants in 401(k) plans might feel restricted by the narrow slate of mutual fund offerings🔯 available to them. And within individual funds, investors have ᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚzero control to choose the underlying stocks, which are selected by mutual fund managers.

Fortunately, many companies offer self-directed or 澳洲幸运5官方开奖结果体彩网:brokerage window functions that give investors the option to 澳洲幸运5官方开奖结果体彩网:m🅷anage their 401(k) plans for themselves. But there are both pros and cons tꦫo taking the do-it-yoursꩵelf route.

The Pros of Managing Your Own 401(k) Plan

More Choices

Self-directed plans offer more investment choices. In addition to 澳洲幸运5官方开奖结果体彩网:mutual funds, portfolios may include 澳洲幸运5官方开奖结果体彩网:exchange-traded funds (ETFs), individual stocks and bonds, plus non-traditio𝄹nal assets like real estate.

“When you go the self-directed route, you are no longer tied to the 15-18 set investment options of your 401(k) plan,” says John P. D♌aly, CFP®, president, , in Mount Prospect, Illinois. “You can purchase just about any stock, ETF, or mutual fund available on the custodian’s platform. This can be very beneficial, especially if your plan has limited investment options or low-quality investment options.”

Quality

Instead of a limited number of mutual funds, brokerage windoꦫws offer a substantially wider array of choices, letting investors be more discriminating in their selection process.

Experience

Those with investment knowledge and skill🌠s can put their experience to the test. This can be a major advantage when compared to traditional 401(k) management.

Discipline

A 澳洲幸运5官方开奖结果体彩网:disciplined investor who maintains their composure during market volatility can exploit opportunities available in a 澳洲幸运5官方开奖结果体彩网:self-directed 401(k). This gives them a leg up ove🎉r mutual funds managed by someone else.

Non-Traditional Investment Options

Self-directed 4♛01(k) investors can incorporate real estate assets and other non-traditional investments into their portfolios, which can potentially provide extraordinary earning opportunities. These options aren’t available to regular 401(k) investors.

The Cons

There are many potential downsides to managing your own i🍨nvestmen𝐆ts.

Rules

Among the plethora of choices available under self-directed 401(k)s, some will inevitably be off-limits due to regulations from the 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS), which prohibits 澳洲幸运5官方开奖结果体彩网:certain types of investments. Those unfamiliar with these regulations may run into trouble and encounter severe tax conse🌱quences, as a👍 result.

Fees

Self-investors who stray beyond mutual funds, or who trade stocks too frequently, may find themselves saddled with exorbitant fees that can potentially wipe out most—if not all—of their gains.

Inexperience

Less experienced investors may miss nuances that a professional manager and a financial advisor will catch.ও

"The biggest bonus to having a self-directed option is the ability to control the expense ratios within each individual investment,” says David S. Hunter, CFP®, president of Asheville, North Carolina-based “However, this opens up thousands of invest👍ment options, and there is always the chance that an investor will be paralyzed by options and may not participate as much as one would with a set-it-and-forget-it 401(k) plan.”

Lack of Liquidity and Transparency

Some non-traditional investments lack 澳洲幸运5官方开奖结果体彩网:transparency and 澳洲幸运5官方开奖结果体彩网:liquidity, which may restrict investors from easily buying ﷺand selling their positions. This can be a rude awakening to those accustomed to the ease of dealing with traditional stocks and bonds.

“The downside of managing your own 401(k), beyond the additional fees, is you pot🤡entially becoming your own worst enemy,” says Mark Hebner, founder and president of , in Irvine, California, and author of Index Fun✃ds: The 12-Step Recovery Program for Active Investors.

“Many investors who do not work with a professional wealth advisor often allow short-term market movements to dictate their long-term investment strategy," Hebner adds. "This approach can potentially cause disastrous long-term effects during very turbulent times.”

The Bottom Line

Managing your own portfolio may afford you a broader array of investment options. But there are also added complexities when it comes to fees, liquidity, and other elements. Those who take the self-directed plunge should take the time to 澳洲幸运5官方开奖结果体彩网:learn the tools available to hಌelp smooth out the process. And don't forget that a 401(k) isn't your only option for retirement saving: there are IRAs and even taxable brokerage accounts, as wellꦇ.