Self-Directed 401k: Is the Average Investor Savvy Enough?

Utilizing a self-directed 401k is something that many investors do when they want more control over their retirement funds. However, this type of investment account is not for everyone. Here are a few things to consider about whether the average investor should choose to pursue a self-directed 401k. 

Investment Choices

The biggest difference between a self-directed and traditional 401k is the amount of choices that you have. With most traditional retirement accounts, you will only be able to choose from a few different types of investments. For example, the provider might only offer you a collection of mutual funds to invest in. However, with a self-directed 401k, you will have many different options to choose from. With this vast amount of options in front of you, it can be a bit overwhelming. Therefore, you will need to be able to conduct research about investments and choose profitable securities.

Savvy Investors

If you plan on taking on a self-directed 401k, you should have a fairly good understanding of investing and how the markets work. The average investor will not be skilled enough to come up with a portfolio management strategy and implement it. However, with some practice and research, you could eventually learn how to manage your own retirement account.

blog comments powered by Disqus