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How to choose 401(k) investments

In most 401(k) plans, each employee is responsible for deciding how to invest their 401(k) savings. Everyone hopes their nest egg will grow enough to support them in retirement. Many people spend more time planning a vacation than they do managing their 401(k) investments.

Employer’s responsibility for 401(k) investments

If you are the business owner, you have the added responsibility of selecting and monitoring the menu of investment options that your employees will purchase with their 401(k) savings. The investment menu must be sufficiently diversified to protect against large losses, and the investment fees must be reasonable. Most business owners engage investment professionals and 401(k) investment firms to help select and monitor plan investments.

Types of 401(k) investments

401(k) plans may offer many types of investments from 401(k) investment firms, including mutual funds, managed accounts, annuities, and employer stock. Your investment options may be limited by your plan document or your plan service provider, who may allow only certain types of investments or certain investment providers through their recordkeeping platform. Ubiquity Retirement + Savings™ offers a variety of flexible investment options for fund selection and investment management.

Ubiquity’s approach to 401(k) investments

Since 1999, Ubiquity has worked with small business owners and financial professionals who manage their clients’ 401(k) plans. With Ubiquity, you have the freedom to craft an investment line-up that fits the needs of your small business. We also provide an unbiased approach to investments, offering a variety of flexible investment options for fund selection and management.

Whether you are looking to hand-pick an investment line up from over 20,000 mutual funds and ETFs, or choose from a variety of pre-selected “turn-key” investment line-ups, or optimize your 401(k) plan’s fiduciary protection with 3(38) Fiduciary Services, Ubiquity has you covered.

Mutual funds

Mutual funds are the primary investment alternative for most 401(k) plans. Mutual funds are managed by an investment company that pools the money of many investors and, based on a specific investment goal (such as growth), invests in multiple investments within each fund offering. The underlying investments in a mutual fund may include various stocks, bonds, and other securities and assets. Because of this diversification, investing in mutual funds is viewed as less risky than investing in individual stocks and bonds.

When you invest in a mutual fund, you own a portion of the fund and share in a portion of the gains (or loss) proportionate to how much you own.

Target Date Funds

Target date funds (TDFs) have become a popular 401(k) plan investment – both as an investment option and as the plan’s default investment for employees who fail to choose their investments. A TDF is a type of mutual fund with investment goals based on a target retirement date (for example “Retirement Fund 2045”).

The underlying investments in the TDF are chosen for growth while the fund investors are young, then automatically adjusted to become more conservative as the target retirement date nears.

TDFs are popular among both business owners and employees because:

  • TDFs meet the Department of Labor’s requirement for a Qualified Default Investment Alternative (QDIA), which reduces fiduciary exposure for the choice of default investment.
  • TDFs simplify an investor’s decision-making process and ensure proper diversification and asset allocation over the long-term based on the investor’s age.

How investments work within a 401(k) plan

In most 401(k) plans, the employer will select a menu of investment options that will be available to plan participants. Each employee must then decide which of those investments to purchase with their 401(k) savings. Some employers provide access to investment education or investment advice services to help employees build their investment portfolio. Others offer investment options, such as TDFs or managed accounts, for employees who do not feel they have the expertise to manage their 401(k) investments.

What is the best 401(k) investment strategy?

Although some studies indicate that consistently contributing to a 401(k) is a better indicator of growth than choosing the “right” investments, you want to ensure that your investment selections are appropriate for your long-term goals and that you are appropriately diversified to avoid the risk of substantial losses. Many factors should be considered when developing your investment strategy.

  • Age and time horizon until retirement
  • Risk tolerance
  • Retirement income needs
  • Other retirement assets, including pension plans and IRAs and how those are invested
  • Other taxable investments (outside of retirement plans)
  • Other retirement income sources, such as Social Security and personal savings
  • Potential health care expenses in retirement and long-term care needs
  • Estate planning goals (such as inheritance for beneficiaries)

Schedule a Free Consultation

Questions? Call us: 855.401.7253 Monday – Friday, 7:00 am – 5:00 pm PT

Our consultants have an average of 10 years experience and can help you navigate the 401(k) landscape–no obligation. Our team is here when you’re ready to get started on your 401(k). Schedule a time that works for you.


Analyzing funds

As you are analyzing the mutual funds available to you through your 401(k) plan, refer to each fund’s prospectus to find details about the fund’s investment objective, risk profile, performance history, and fees. You can also find investment performance and fee information in fee disclosure documents you receive from your employer, your service provider, or from the mutual fund itself. You may also find online tools, such as this fund analyzer, to help you compare and evaluate mutual fund performance and fees.

Many people find it helpful to engage a financial advisor to help them assess retirement income needs and develop a customized 401(k) investment strategy.

Flexible investment options with Ubiquity

Mutual funds and investment management services charge a fee based on the amount of money in your plan. Because we work exclusively with small businesses, we only work with partners who charge the industry’s lowest asset-based fees for fund selection and investment management. Depending on the type of Ubiquity plan you have, you can choose:

  • A brokerage option to make investments
  • Investment options that have been carefully selected by a third-party investment expert
  • To build your own custom fund list
  • To work with a financial advisor to choose investments.
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“G and G Partners has been using Ubiquity Retirement the last 2 years. Their response has been excellent when we had questions or needed help completing forms. I give Ubiquity 5 stars.”
- Tony Giuliani, G and G Partners

Learn more

If you are a small business owner and need a 401(k) plan for yourself and your company, only Ubiquity offers flat-fee plans plus free expert advice. We will fully customize your 401(k) to meet the specific needs of your small business.

Check out our cost-effective plan solutions

Setting up a 401(k) can be complicated. Only Ubiquity gives small business owners access to 401(k) experts in addition to industry leading low flat-fees. Each sales expert has over a decade of experience assisting business owners in 401(k) plan design. Take advantage of this free benefit.

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44 Montgomery Street, Suite 3060
San Francisco, CA 94104
Support: 855.401.4357

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© 2023 Ubiquity Retirement + Savings
Privacy Policy
Do not sell my info
44 Montgomery Street, Suite 3060
San Francisco, CA 94104
Support: 855.401.4357

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