Americans are mostly investing their 401 (k) plans in equities, either through mutual funds or company stock, according to data from the Employee Benefit Research Institute. Sixty-eight percent of 401(k) participants placed their plans in equity securities in 2005, which has changed little in recent years, the report states.
Younger Americans tend to hold a higher portion of their 401(k) accounts in equity assets. Participants in their 20s held 52% of their account balances in equity funds, compared to 38% of accounts balances for participants in their 60s.
Additionally, 10% of participants placed retirement assets in bond funds, 4% in money market funds and 13% in company stock.
Also, shares of company stock continued to fall, accounting for 13% of 401 (k) plan assets on average at year-end 2005, down from 19 % in 1999. The new downward trend suggests a change in plan design and in participants’ behavior, EBRI notes. Less new hires are holding company stock, and fewer are holding high concentration of company stock.