Allocation of 401(k) Plan Assets
Chart of the Week for October 27-November 2, 2006
401(k) plans are now the most common type of employer-sponsored retirement plan in the U.S. It’s interesting to see how American workers have chosen to allocate assets in their 401(k) plans over a two year period.
According to a recent study by the Investment Company Institute (ICI), 48% of 401(k) plan participants’ account balances were invested in equity funds in 2005. In 2004, only 46% was invested in equity funds. The popularity in equity funds contrasts to the declining interest in individual company stocks among 401(k) participants. Balanced funds and GICs (guaranteed investments contracts) along with other stable value funds both gained a slightly larger share of allocation in total plan assets compared with their allocation in 2004. Bond and money funds’ portions in total plan assets remained unchanged at 10% and 4% respectively.
Although the allocation of aggregate 401(k) plan assets has leaned toward equity investments, plan participants should stay diversified among different asset classes and make allocation decisions according to their risk tolerance, timeline, and investment objectives.
* This illustration was compiled by information from outside sources. These companies are not affiliated with ICMA-RC. This information is being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. The ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing. Past performance does not guarantee future results. Investment returns and principal value will fluctuate, so that an investor’;s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data illustrated. For performance data current to the most recent month end, contact ICMA-RC Services, LLC by calling 1-800-669-7400 or by writing to 777 North Capitol Street, NE, Washington, DC 20002-4240, or by visiting www.icmarc.org. Please consult both the current Vantagepoint Funds prospectus and MAKING SOUND INVESTMENT DECISIONS: A Retirement Investment Guide carefully for a complete summary of all fees, expenses, charges, financial highlights and investment objectives, risks and performance information prior to investing any money. Vantagepoint securities are distributed by ICMA-RC Services LLC, a broker dealer affiliate of ICMA-RC, member NASD/SIPC. For a current prospectus, contact ICMA-RC Services LLC, 777 North Capitol Street NE, Washington, DC 20002-4240. 1-800-669-7400. AC:1006-1060.