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Why Your 401(k) Might Be Underperforming and What You Can Do About It


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" 401 (k) administrators also have an obligation to regularly review the funds they're offering in the plan, so if any funds are consistently underperforming, the plan may end up removing the fund and replacing it with a better option," Adams says.

The article from MSN Money discusses several reasons why a 401(k) might be underperforming and offers solutions to improve its performance. Key points include the impact of high fees, which can significantly reduce long-term returns; the importance of diversification to mitigate risk; and the need for regular rebalancing to maintain an optimal asset allocation. It also highlights the pitfalls of not contributing enough or at all, suggesting that increasing contributions, especially to take full advantage of employer matches, can boost retirement savings. Additionally, the article advises on the benefits of understanding and possibly changing investment options within the 401(k) plan, like moving away from underperforming funds or target-date funds that might not align with one's risk tolerance or retirement timeline. Lastly, it emphasizes the role of financial education and possibly consulting with a financial advisor to tailor the 401(k) strategy to individual needs.

Read the Full Investopedia Article at:
[ https://www.msn.com/en-us/money/savingandinvesting/why-your-401k-might-be-underperforming-and-what-you-can-do-about-it/ar-AA1BySUl ]

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