401k Hidden Dangers You Need To Know

401Being popular doesn?t always equate to being ideal.

Just look at the life of any stellar athlete, actor or pop star. They may lead glamorous lives, but deep down they have some issues.

When it comes to the most popular mutual funds within 401(k)s, you really have to take a hard look at what the fund holds and how it might perform.

According to BrightScope, a company that rates 401(k) plans, the most popular fund within the retirement plans it tracks is the Vanguard Wellington fund (VWELX).

The runners up are the Fidelity 2020 and 2030 funds, target-date funds that ratchet down stock holdings the closer you get to the ?target? year in their title (more on target-date fund risks in future posts).

For most investors, The Wellington fund, with a mix of about 65% stocks and 34% bonds, is an excellent core holding.

If you are a moderate-risk investor and don?t want to be all-in on stocks or bonds, Wellington manages this mix for you. Although it?s kind of pricey for a Vanguard fund ? 0.26% annually in management expenses ? it?s a relative bargain compared to most managed stock and bond funds out there. I can understand why it?s so popular.

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