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Using A Self Directed Brokerage Account Inside 401k

We've gotten several questions recently on ways to buy stocks or other investments inside a 401k.  Some plans provide a "self-directed brokerage" account.  This account actually links to your 401k and contributions are placed in  account.  It certainly does expand your investment options however,  this arrangement is not very common-so talk with your benefits office or plan administrator to see if this is available.   Morningstar explains some of the advantages and disadvantages.

"Good Reasons to Use Self-Directed Brokerage
It could make sense to venture outside your plan if your lineup is fraught with funds with poor long-term records or high expenses. You might be able to find some good choices in your plan, such as an S&P 500 Index fund, and then use your brokerage option to fill out the rest of your portfolio, focusing on those with strong long-term records, experienced management teams, and moderate costs".

Posted on Wednesday, August 2 by Registered CommenterWise Owl in | Comments Off