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Why your 401(k) may be breaking the first rule of investing


Published on 2025-01-11 21:21:13 - MSN
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  • This means anyone investing in the S&P 500 or a typical mainstream U.S. stock fund is now gambling one-third of their money in just seven companies. The S&P 500 is considered the standard stock-market benchmark for U.

The article from MSN Money discusses the common pitfalls of 401(k) plans, particularly focusing on how they might violate the first rule of investing: diversification. It explains that many 401(k) plans offer a limited selection of investment options, often heavily weighted towards the company's own stock or a narrow range of funds, which can lead to a lack of diversification. This concentration risk is highlighted by historical examples like Enron, where employees lost their retirement savings due to an over-reliance on company stock. The piece advises investors to ensure their 401(k) investments are spread across various asset classes to mitigate risk, and suggests looking into target-date funds or index funds if the plan's options are limited. Additionally, it recommends considering rolling over a 401(k) into an IRA for more investment flexibility if one leaves their job.

Read the Full MSN Article at:
[ https://www.msn.com/en-us/money/savingandinvesting/why-your-401-k-may-be-breaking-the-first-rule-of-investing/ar-BB1rhdhR ]
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