Limited Asset Classes
When you buy investments in an IRA or a regular taxable account, you can usually invest in almost anything you’d like. Stocks, bonds, mutual funds, ETFs, CDs, gold and commodities are freely available. You might even be able to invest in cryptocurrencies, emerging market bonds, options or master limited partnerships.
In a 401(k), however, you’re limited to select asset classes as delineated by your plan. In many cases, you’ll only have access to the most basic choices, such as large-cap stocks, small-cap stocks, investment-grade bonds and Treasury securities. This can be a major drawback since 401(k) plans often comprise the bulk of an investor’s retirement savings.
