How To Invest In Your 401k
Hint: Target Date Funds may not be your friend...
Most people have access to a retirement plan through their employer—whether it's a 401(k) or 403(b). It’s one of the easiest and most powerful ways to build long-term wealth, but too many people leave opportunity on the table simply because they don’t understand their options.
It’s not your fault. These plans can be confusing. When you don’t make an investment election, your company will likely default your money into a target date fund. While those aren’t inherently bad, I think you can do better—especially if you’re in your 20s or 30s and have decades ahead of you.
To be fair — target date funds simplify everything. For example, the Vanguard Target Retirement 2060 Fund is designed for those expecting to retire around 2058-2060. This fund is made up of roughly 91% stocks, 9% bonds. That sounds aggressive, but ask yourself: What the f*** is 5–10% in bonds really doing for me when I’ve got a long-term investment horizon?
It’s likely just diluting your long-term returns.
That same fund also holds about 37% in international stocks, which are having a moment in 2025, but have significantly underperformed U.S. markets for most of the last decade.
A professional fund manager is making decisions for you without knowing anything about your goals or tolerance for volatility. It’s better than nothing—but not necessarily tailed to you…
So what should you do?
Your 401(k) is the ultimate set-it-and-forget-it account. It’s automatic. With every paycheck, you’re investing through the market’s ups and downs. This emotionless approach is incredibly powerful and disciplined.
You’re buying more shares when prices drop—without even thinking about it. Investing more heavily in stocks can significantly improve your long-term outcomes.
Not everyone needs to be 100% in equities, and some don’t have the stomach for it, but for most younger investors, leaning into risk gives you the best chance to build wealth.
Most plans offer a selection of low-cost mutual funds. You generally don’t have full control—you can’t just buy whatever you want—but there are usually enough solid choices to build a well-diversified portfolio.
If you find your plan’s investment menu too limited, and you’re eligible, consider directing additional savings to an IRA or a taxable brokerage account.
A myth some don’t believe, maxing out your 401k isn’t the end all be all…
Personally, I’m currently keeping things very straightforward. My 401(k) allocation is:
80% Vanguard Total Stock Market Index Fund
20% Vanguard Total International Stock Index Fund
Low cost. Broad exposure. Done.
I check it quarterly when I update my net worth and otherwise leave it alone. I don’t play games, I don’t try to time the market, and I don’t make emotional changes when chaos ensues. I focus on getting the big things right (grow income, pay down debt, stay consistent) and move on with my life.
Here’s a sample portfolio for you to consider:
S&P 500 Index Fund: 30–40%
International Stock Fund: 15–20%
Mid-Cap Fund: 15–20%
Value or Dividend-Focused Fund: 10–20%
Higher-Risk Growth Fund: up to 10%
This blend gives you exposure to different asset classes, US and international, and 100% stocks.
I’m a big proponent of diversification — there is always one asset class that outshines the others for a period of time, but not forever.
A few other tips…
If there’s a match, always contribute enough to get all of it. That’s free money.
No match? If you’re in a high tax bracket, consider contributing pre-tax to reduce taxable income. Or if you make too much to contribute to a Roth IRA, contributing to a Roth 401(k) can be a great way for you to build tax-free growth.
Use retirement accounts to be aggressive. Build up cash elsewhere for flexibility.
Don’t forget to invest rollovers. Too many people move old 401(k)s into new plans and forget to invest them…
Look, I’m biased—I typically work with people in their 40s, 50s, 60s, etc. They have saved steadily in their retirement plans and a good amount have stayed aggressive through the years.
What those accounts have grown to is often hard to believe. But it’s not magic. It’s just consistency, time, and a willingness to take some risk.
Give yourself that same shot to build significant wealth.
Not sure where to start? Reach out to me.
Disclosure: This material is for general information only and is not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.
All indices are unmanaged and may not be invested into directly.
All investing includes risks, including fluctuating prices and loss of principal.