Share a word about how your 401(k) account is invested.

More than a third of working-age Americans have money in a 401(k) account, and another 18% have individual retirement accounts (IRAs). The average balance in those accounts is $30,000, according to the census.

So where exactly is all that money? Tech stocks, mostly.

Typically, people invest their 401(k) money in funds, pooled investments that spread money across hundreds (if not thousands) of different stocks and other securities, including other funds with their own overlapping investments. .

The Russian doll structure helps spread risk by investing widely and diversifiedly in the stock market and often maximizes returns by investing more in reliable high-performing companies known as blue chips.

Some of the biggest pension funds tend to have one thing in common: a heavy emphasis on technology stocks like Microsoft, Apple, Nvidia, Alphabet (Google) and Meta, which can make up nearly a quarter of the total. holdings of an equity-based fund. That roughly matches the market value of those companies relative to others in the S&P 500.

“For four of the previous five years, technology stocks have outperformed the broader stock market,” according to a recent US Bank report. “It’s reasonable to expect technology stocks to play a role in any diversified portfolio.”

Depending on your age and investment strategy, the closer to retirement, the lower the risk, and vice versa, there are different funds with different types of assets. In general, more risk means more stocks, less risk means more bonds. And some funds specialize in different sectors or take a broader or narrower sample of the stock market.

While employer-sponsored 401(k) plans are often left on autopilot, individual investors can say where the money is going.

“Your retirement planning strategy should evolve over time along with your life stage and unique situation,” said Sarah Darr, head of financial planning at US Bank Wealth Management in Minneapolis. “Some investors choose to periodically review and rebalance their 401(k) plan themselves, while others benefit from target date funds that manage investments on the investor’s behalf.”

Here’s how to make sure your retirement funds are in the right place:

Where to look

To find out what’s in the portfolio, first find out what funds your plan invests in by logging into your 401(k) account portal, calling your plan manager or asking your employer for documentation.

“Employer 401(k) plans are required to provide a fee disclosure notice at least once a year,” Darr said. “The plan must also distribute a summary plan description and prospectus, which likely includes information on the plan’s investment options.”

Top-tier funds often have names like Vanguard Target Retirement 2045, Schwab 1000 Index, or Fidelity Freedom Index 2055. These funds can hold a variety of other investments, and only by peeling back that extra layer can you find individual stocks and bonds.

For example, the Fidelity Freedom Index 2055 invests in the Fidelity Total Market Index Fund and the Fidelity Global ex Index US Fund. You can often find those holdings under a “composition” or “asset allocation” heading or by searching by name or symbol on Fidelity’s website, which will bring up a web page with the semiannual reports of those funds that contain a list of thousands of possessions and their values. Keywords to search for are “prospect” or “ingredients”.

Research notes

Brokers like Schwab and financial services firm Morningstar also offer search engines that provide high-level information about the fund, including their Top 10 holdings, with links to documents.

For a deeper look at what’s in a fund with an emphasis on sustainability, the environmental nonprofit As You Sow built a rating system for the funds and identifies which fossil fuel companies they invest in. The Invest Your Values ​​tool was created after the nonprofit organization reviewed its employee retirement plan and discovered that it offered a fund focused only on oil pipeline companies.

“As we began to investigate, we quickly realized that the immediate stumbling block was a lack of transparency. 401(k)-style plans typically offer a list of 10-20 plan options, but finding out which companies are held within the portfolio means searching through many documents,” said Andrew Montes, director of digital strategies at As You Sow. “Our Values ​​Investment resources and tools have expanded to cover deforestation, gender equality, civilian firearms, military weapons, the prison industrial complex and tobacco. .”

The group also tracks what plans major employers like Target offer and rates them.

Public data

For the full scope of investments, which can include thousands of individual holdings, look for a fund’s prospectus. These public filings provide a snapshot of a fund’s investments in semiannual or monthly reports and are available online or by asking an employer or fund manager. Companies also file them with the US Securities and Exchange Commission.

“Ask your employer’s benefits team, or your 401(k) plan manager, for more information about the specific funds offered by your plan,” Montes said. “They should be able to provide links to the full prospectus of each fund offered by your plan.”

As for what to do with this newfound portfolio knowledge, workplace-sponsored 401(k) plans typically have a limited menu of investments available to employees. Some plans allow more individual adjustments, while others are less flexible.

“Investment-savvy participants looking for other options will want to see if their plan offers a self-directed brokerage option, which can give participants access to thousands of mutual funds, and in some cases, exchange-traded funds in exchange and even individual shares.” Darr said.

If that option isn’t available, Montes said employees should voice their concerns as a team.

“A chorus is harder to ignore than a single voice,” he said. “At the end of the day, it’s your money and you deserve a say in how it’s invested.”

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