Choosing the best 401k plan

There is a lot to think about when selecting a 401k plan. How can you know which fund is best for you and your retirement needs? Here are some factors to consider:

Fees. When it comes to long-term investing, you want to avoid fees, if possible. A smart way to do this is to compare the fees charged by funds offered through your retirement plan. Keep in mind that even small fees can take a big chunk out of your savings in the long run. How much is too much? This adviser, writing in Forbes, suggests this benchmark: For most big U.S. stock funds, if you’re paying more than 0.10 percent each year, you’re paying too much. By this measure, he suggests these four are among the cheapest funds:

• Schwab US Broad Market ETF, 0.03%.
• iShares Core S&P 500 ETF, 0.04%.
• Vanguard Total Stock Market ETF, 0.05%
• Vanguard Short-Term Govt. Bond, 0.07%.

Your needs. When you are choosing your fund, it must meet all of your needs. The best thing you can do is learn about basic asset allocation, or picking the right percentage of stock-based funds and fixed-income funds. This will vary with your age and risk tolerance, but a popular method to determine your basic asset allocation is the 110 rule. Subtract your age from 110 to determine what percentage of your portfolio should be invested in stocks. The remainder will be in bonds.

Timelines. If you wait to start saving for retirement you will regret it. Did you know only 32 percent of the total workforce is saving for retirement via a 401k? If you start saving at the age of 25, you could have up to $1 million by the time you retire. Of course, it depends on how much and how regularly you invest. Start now and live a better life later!