QUESTION:
I have a 401(k), and not much choice of investments. What can I do? Should I even participate?
ANSWER:
Company retirement plans like 401(k)'s are arranged by your company management. They select the company(s) into which you may invest. Unfortunately sometimes they may not have the best choices available. Often this is because the plan is sold to your company by a representative of a big insurance company or mutual fund provider. Because of this, they often have sales loads in addition to the administration costs.
Well, you can only do what you are allowed within the parameters of your plan. So, look at the plan, try to select from that plan what is best for you and arrange a portfolio with what is available. Try not to whine too much about what you don't have, and work with what you do. We do the best we can with what options available within the limits of the plan.
This plan should be balanced with your taxable investments. Investments you hold outside the plan should often be different from those inside. We want to try to achieve the greatest net after tax benefit.
It is almost always better to contribute as much as you can to the plan because it is tax deductible. Then do the best you can within whatever constraints it may have.
A poor 401(k) is better than none at all. If you are not sure where to put it, place it into the money market account until you know. They all have cash account options.
When you retire, or sever ties with the company you can move it to an Individual Retirement Account wherever you want and manage it how you see fit.