4 in 10 Americans Don't Understand This Popular 401(k) Investment Option
The money you contribute toward retirement savings shouldn't just sit in cash. Rather, you'll want to make a point to invest that money so it grows into a larger sum over time and leaves you with a large enough nest egg for a comfortable retirement.
Now if you're saving for retirement in an IRA, you'll generally have a wide range of investment options, from index funds to individual stocks. With a 401(k) plan, you generally won't get the option to buy stocks on a company by company basis. Instead, you'll usually be limited to a number of different fund choices. These might include mutual funds, index funds, and target date funds.
A recent survey by the Employee Benefit Research Institute, however, found that four out of 10 Americans don't really understand how target date funds work. And that's a problem given how popular these funds are.
Source Fool.com
