Participants in 401(k) plans might feel 🐼restricted by the narrow slate of mutual fund offerings available to them. And within individual funds, investors have zero control to choose the underlying stocks, which are selected by m🍃utual fund managers.

Fortunately, many companies offer self-directed or 澳洲幸运5开奖号码历史查询:brokerage window functions that give investors the option to 澳洲幸运5开奖号码历史查询:manage thei𒁃r 401(k♛) plans for themselves. But there are both pros and cons to ta♏king the do-it-yourself route.

The Pros of Managing Your Own 401(k) Plan

More Choices

Self-directed plans offer more investment choices. In addition to 澳洲幸运5开奖号码历史查询:mutual funds, portfolios may include 澳洲幸运5开奖号码历史查询:exchange-traded funds (ETFs), individual stocks and bꦐonds, plus non-traditional assets like real estate.

“When you go the self-directed route, you are no longer tied to the 15-18📖 set investment options of your 401(k) plan,” says John P. Daly, CFP®, president, , in Mount Prospect, Illinois. “You can purchase just about any stock, ETF, or mutual fund available on the custodian’s platform. This can be very beneficial, especially if your plan has limited investment options or low-quality investment options.”

Quality

Instead of a limited number𒁏 of mutual funds, brokerage windows offer a substantially wider array of choices, letting investors be more discriminating in their selection process.

Experience

Those with investment knowledge and skills can put the♓i💫r experience to the test. This can be a major advantage when compared to traditional 401(k) management.

Discipline

A 澳洲幸运5开奖号码历史查询:disciplined investor who maintains their composure during market volatility can exploit opportunities available in a 澳洲幸运5开奖号码历史查询:self-directed 401(k). This gives them a leg up over mutual🌳 funds managed by s💞omeone else.

Non-Traditional Investment Options

Self-directed 401(k) i🔴nvestors can incorporate real estate assets and other non-traditional investments into their portfolios, which can potentially provide extraordinary earning opportunities. These options aren’t available t🍃o regular 401(k) investors.

The Cons

Ther🎃e are many potent🦩ial downsides to managing your own investments.

Rules

Among the plethora of choices available under self-directed 401(k)s, some will inevitably be off-limits due to regulations from the 澳洲幸运5开奖号码历史查询:Internal Revenue Service (IRS), which prohibits 澳洲幸运5开奖号码历史查询:certain types of investments. Those unfamiliar with 🧔these regul𓄧ations may run into trouble and encounter severe tax consequences, as a result.

Fees

Self-investors who stray beyond mutual funds, or who trade stocks too frequently, may find themselves saddled with exorbitant fees that can potentially wipe out most—if not all—of their gains.

Inexperience

Less experienced investors may miss nuances that a professional manager and a 🎶financial advisor will ca𝕴tch.

"The biggest bonus to having a self-directed option is the ability to control the expense ratios within each individual investment,” says David S. Hunter, CFP®, president of Asheville, North Carolina-based “However, this opens up thousands of investment options, and there is always the ♐chance that an investor will be paralyzed by options and may not participate as much as one would with a set-it-and-forget-it 401(k) plan.”

Lack of Liquidity and Transparency

Some non-traditional investments lack 澳洲幸运5开奖号码历史查询:transparency and 澳洲幸运5开奖号码历史查询:liquidity, which may restrict investors from easily buying and selling their positions. This can be ꦿa rude awakening to those accustomed to the ease of dealing with traditional stocks and bonds.

“The downside of managing your own 401(k), beyond the additional fees, is you potentially becoming your own worst enemy,” says Mark Hebner, founder and president of , in Irvine, California, and author of Index Funds: The 12-Step Rec⛦ove♊ry Program for Active Investors.

“Many investors who do not work with a professional wealth advisor often allow short-term market movements to dictate their long-term investment strategy," Hebner adds. "This approach can potentially cause disastrous long-term effects during very turbulent times.”

The Bottom Line

Managing your own portfolio may afford you a broader array of investment options. But there are also added complexities when it comes to fees, liquidity, and other elements. Those who take the self-directed plunge should take the time to 澳洲幸运5开奖号码历史查询:learn the tools available to help smooth out the process. And don't forget that a 401(k) isn't your only option 🎃for retirement saving: there are IRAs and even taxable brokerage ac♛counts, as well.