Reply #10: Default investments: [View All]

[rusty charly]

Currently, the default investment in a 401(k) plan is usually a low-yielding money-market account. The problem with that is a surprisingly large number of people never move their money out of that account and into higher-yielding stock or bond investments they need to provide adequate retirement savings.

As a result, the Labor Department is readying proposed regulations that would let employers default their workers into broadly diversified investments. These multi-asset investments include several different types of funds: "age-based funds," in which a portfolio of other mutual funds is tailored to a particular expected retirement date; "risk-based portfolios" of funds (such as "conservative" or "aggressive"); "balanced funds," which are a blend of stocks and bonds; and "managed accounts," which are portfolios customized to consider not just a person's age and risk-tolerance, but also other investments.