Your 401(k) plan's savings you make on an annual basis shouldn't be left sitting in cash.
In order to maintain your purchasing power as you age, you'll need your nest fund to keep pace with inflation. Therefore, it's crucial to wisely invest your retirement funds.
Ideally, your 401(k) plan will provide you with a range of investment options that will enable you to invest your money in line with your risk appetite, strategy, and objectives.
If not, you might want to look for a better place for your nest egg.
A good combination of actively managed mutual funds, passively managed index funds, and target date funds is available in the majority of 401(k) plans.
However, if you're dissatisfied with the variety of fund options in your 401(k), it might be wise to invest your long-term assets elsewhere.
According to Vanguard, the average 401(k) plan had 27.5 investment options in 2016. The amount remained essentially constant from the 2020 average of 27.4 funds.
A 401(k) is where 55% of Americans save their money: However, it might not be your greatest option for a retirement plan.
However, some 401(k)s have much fewer fund options.
If that applies to you and you don't like the exact alternatives you have, you might want to consider investing your money in something other than a 401(k) (k).