Limited Moves

A 401(k) is only as good as your investments. Opening one of these retirement accounts isn’t enough — you need to be invested so that money does some work for you. You want your money to keep pace (or outpace) inflation, so that when you retire you’ll have plenty of buying power. Sometimes, however, you might not like the investment choices your 401(k) offers. Here are some things to consider if that happens to you.

The Average

Most 401(k)s have a mix of actively managed mutual funds, passively managed index funds and target date funds. USA Today reports that the average 401(k) has about 27 different investment options. Does your plan have less than that? If so, you might want to consider other options.

The Cost

A 401(k) plan with few investment options can cost you in several ways. You could be paying big fees on investments that crush your returns. The lack of options could also lead you to invest more conservatively, which means less of a total return when you retire.

The Move

Instead of sticking to your narrow 401(k) options, you could also open a traditional or Roth IRA. The upside of an IRA is that it allows you more investing options than a 401(k). If you do open an IRA, don’t close your 401(k). This is especially important if you have an employer match for it. Even with limited investment options, a 401(k) that kicks back free money should be kept around.