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A Better Way to Invest in Your 401(k)?Morningstar debates the pros and cons of using the self-directed windows in certain 401(k) plans. My employer Microsoft never offered one, and as far as I know, there are many an anger employees. Some even wrote a whitepaper for Bill Gates' think week this spring. For me, I would certain entertain more flexibility in investing our 401(k) balance over $80,000. From Morningstar:
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That "advice" from Morningstar had no advice to it (at least the quoted portion, I didn't read the artcile). Plus, the quoted article makes no sense. You could just set up a portion of your 401(k) to be invested in your money market fund (the one linked to the self-directed window), and then whatever mutual fund you choose through the self-directed window, you could just set up an automatic investment plan from the money market fund to the mutual fund.
I.E., on the 1st and 15th of every month, $100 goes into the self-directed window money market fund. On the 8th and 23rd (or whenever, I just chose a week after to make sure the employer deposits the money in time), you have $100 automatically invested from the money market to the mutual fund. Done.
So, there is no recurring "logistical hassle" you have to deal with. Morningstar article doesn't have a valid point.
It looks like the "logistical hassle" is close to zero and there is no reason to worry about it. Everything is almost effortless and the reminders and the reminders help you do your job as easy as possible so the self-directed brokerage is as easy as it could possible be.
