In reality most people don’t give much thought to their 401k allocation. Many people use a “set it and forget it” approach that is not well thought out or monitored. For the employees of Intel, we feel that this approach leaves value on the table. The Intel 401k plan has a great deal to offer its participants. So let’s take a deeper look! In this article we’ll cover the three major things you need to know about the Intel 401k plan as well as the important questions you should ask yourself in order to maximize benefit from what the plan has to offer.
#1 A variety of asset classes
Did you know there are four broad based asset classes, or investment types, in the Intel 401k plan?
- US equities
- International equities
- Emerging market equities
- Fixed income
Questions to ask yourself:
- Am I appropriately diversified across these asset classes?
- Is there an asset class concentration, even though I may hold many different funds? In other words, am I less diversified than I should be even though I’m invested in several funds?
- Is this blend of asset classes well suited for my risk tolerance? Am I taking too much risk? Too little?
- Finally, are there any opportunities in various markets which may make sense to invest in today relative to others?
#2 Passive vs. active
Within each asset class, you can choose between passive (or index funds) and managed mutual funds. Passive funds tend to track their benchmark while managed funds try to beat their benchmark.
Typically this distinction comes with a difference in fees. Passive fund tend to carry lower fees while active funds typically charge a higher fee to compensate for the management of the assets.
Questions to ask yourself?
- Did my active funds perform well enough to justify the expense that they cost me?
- Should I pick a blend of passive and active funds, or does it make more sense to use all of one type and none of the other?
- Are passive funds appropriate for me or would it be better to pay for active funds that could potentially reduce risk or earn a higher return?
#3 Not all funds are created equal
When considering a fund, evaluate not only the performance but in particular the long term performance relative to the benchmark as well as the expenses of the fund.
- What is the performance net of fees and risk level for each fund I am invested in?
- How did my portfolio do overall compared to an appropriate benchmark?
- How did each of the funds I hold perform relative to its respective benchmark?
Picking funds within the Intel 401k plan
The next time, we’ll talk about how to evaluate the right funds for you to give you the appropriate mix given your risk tolerance. In the meantime, if you have any questions about investing in the Intel 401k plan, please contact us.
Please Note: Nothing on this page should ever be considered to be advice, research or an invitation to buy or sell any securities. Please visit our Important Consumer Disclosure for more information. This content is intended for informational purposes only and should not be construed as financial, legal or tax advice. Please seek out the assistance of a professional advisor when making decisions related to your unique circumstances.
Providus Advisors is not affiliated with Intel Corporation in any way.