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15015 Jamestown Boulevard, Suite 100, Baton Rouge, LA 70810. 

Advisors of Horizon are Registered Representatives of Cetera Advisors a broker/dealer and Registered Investment Adviser.

Jan 9, 2019

There are several different assets you can choose to invest in within your 401K. How do you know which to choose? There is a range of different risks and rewards associated with each asset. Today, the 401K brothers add some light to the different investments and their risk.


Show Notes:

  • :30 - Why are there so many different asset classes to choose from in your 401k
  • :40 - Some people have a greater appetite for risk especially. We also must keep mind that people from their 20´s to 60´s are investing in these asset classes.
  • 1:26 - The different types of assets
    • 1: 30 - Cash - you know what you will get. However, cash or cash equivalents do not outpace inflation. It is a safe haven over a short period of time.
    • 2:56 - Bond funds - You look at this like an I owe you. You are lending the company your money. A little more risk than cash however you have a little bit more return.
    • 4:20 - Large- cap Stock - When you buy a stock, you are buying ownership of that company. Large cap are like Exxon, McDonalds, Walmart, etc.
    • 5:25 - Mid-cap - Funds that are smaller than the large cap. These are maturing companies. They are not mature like Exxons and Walmarts. They carry a little more risk.
    • 6:27 - Small- cap - Companies that are valued at less than $2 B. There is more uncertainty in this class.
    • 7:30 - International Funds - These are companies outside of the US. You have no idea about the politics, it is a different currency, and you have no say in either of these things.
  • 8:30 - It is good to understand the risk and reward scale to understand what you are comfortable with.
  • 9:22 - If you have a shorter time window to retirement, you need to understand that you will have a smaller tolerance for risk.
  • 10:00 - Specialty funds and Balanced funds - Specialty funds are geared towards a certain sector ie healthcare, energy, or real estate fund. Balanced funds are based on age appropriate or risk associated funds. It is a blended balance depending on what you select.



3 Key Points:

  1. There are several different classes within a 401k plan.
  2. Each asset class varies on the risk scale.
  3. The different classes of assets on a scale from less risk to more risk are cash, Bond, Large caps, Mid-cap, Small-cap, International funds.


Tweetable Quotes:

-       “Cash or Cash equivalents do not outpace inflation.” –Bill.

-       “More risk and more reward.” –Bill.

-       “It is important to know the risk rewards scales because within a 401k plan you are taking on risk and it depends on what you are comfortable with. ”  –Bill.




Resources Mentioned: