I currently have a work managed 401k where I contribute 11% with a 4.5% company match. This account is diversified into mutual funds/bonds etc… with what appears to be no option for me to choose other funds or options. My question is - should I be giving less to my work sponsored 401k and more to an individual brokerage account so I can invest in index funds or is it still an OK strategy to match out this account even though I have no control over it and potential high fees?
Getting a 4.5% match from your company is not going to make up for high fees and poor performance because of the fund choices you have.
Are you sure there are not any better choices for your 401k? If there aren’t, then I would def start putting that money into my own brokerage account.
Here’s a guy who thinks a standard brokerage account is better than a 401k, he explains it very well
And another one Investing Like This? You’re Paying Too Much Tax! - YouTube
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That’s a bummer that you can’t choose what investments the money is put into inside your 401k .
As for your question if it’s better to put it in a Brokerage account, I would recommend you to crunch some numbers and see the pro’s and cons, for example, I max out my 401k , which greatly reduces my take home money and thus I pay less taxes, then the money will be there until I take it once I plan to have no income and then get those distributions taxed…
As for the brokerage, the money you put into it has been taxed and then the gains will also be taxed as capital gains , but again, if you have a better investment than the one offered by the 401k , then it could be something to consider.
In essence, everyone has a different situation, sometimes one strategy works for some and for a certain time as well. HTH