Opening a 401k can be a big step toward saving for retirement, but a financial planner says there's a mistake lying in wait

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Your 401(k) makes you both a saver and an investor.

• Eric Roberge, a certified financial planner and the founder of Beyond Your Hammock, says too many people treat their 401(k) like a savings account.
• 401(k)s are a powerful, tax-advantaged investing tool, and choosing how the money is invested is up to you.
• Roberge recommends choosing either an all-in-one target date fund, which automatically rebalances itself, or building a portfolio of individual funds that provide appropriate diversification.
• Visit Business Insider's homepage for more stories.

Your office 401(k) may feel like an untouchable savings account, but it's actually a powerful, tax-advantaged investing tool.

A whopping $5.3 trillion was held in 401(k) plans at the end of 2017, accounting for nearly one-fifth of all retirement assets in the US, according to the Investment Company Institute. When you defer part of your paycheck into your 401(k), the money doesn't just sit there until you need it for retirement - you have to decide how to invest it.

About 55 million Americans contribute to a 401(k) plan at work, and according to certified financial planner Eric Roberge, too many people make the same mistake when it comes to managing theirs. He says it has more to do with perception than anything.

In a recent tweet, Roberge wrote: "Big #money mistake I see a LOT: ignoring how a 401k portfolio is invested b/c it feels like SAVINGS & only thinking it's INVESTING if your money is in a brokerage acct (then *over*reacting emotionally b/c you're checking it constantly/making poor investment choices as a result)."

401(k)s are designed to make investing fairly simple. Most 401(k) plans offer between eight and 12 investment options, which can be a mix of mutual funds, stock funds, bond funds, and even annuities. That's far fewer than what's available in a typical brokerage account or IRA - and it can be both good and bad.

"When it comes to 401(k) investments, the challenge is typically the limited amount of investment choices," Roberge told Business Insider. "Many plans offer target date funds along with a handful of individual funds. So, the decision ends up being to choose the target date fund that is closest to your expected retirement date or build your own portfolio with the individual funds available."

It can be tough to find exactly what you want in a 401(k) with limited options, but you'll be in good shape so long as you choose investments that diversify your portfolio - i.e. a mix of stocks and bonds - and don't levy too many fees, though management fees are unavoidable in most 401(k)s.

"Sometimes the target date fund provides the asset class diversification needed and you may not get that same diversification ability with the individual funds. Sometimes the opposite is true," Roberge said. Target date funds are an "all-in-one" fund that automatically choose a blend of investments based on your age - the younger you are, the riskier the investments (more stocks).

In your 401(k), target date funds may be labeled by year of expected retirement, such as "Target 2040." In this case, the fund is made up of a blend of investments that assumes retirement in the year 2040, so investments will need to be as conservative as possible by that time. Oftentimes, if you don't choose another investment, you'll be defaulted to a target date fund usually matching your full retirement age.

"One great thing about the target date funds is that there is no rebalancing necessary as it is all done for you inside the fund," Roberge said. With individual funds, he said, you or your adviser will have to "rebalance" your asset allocation every year to ensure it aligns with your larger portfolio.

As you choose which funds to invest in, you'll decide how much of your 401(k) contributions will go toward each, usually expressed as a percentage. If you only choose one fund, 100% of your money will be invested in that fund. If you create a portfolio with three different funds, you can decide what percentage of your contributions will go toward each fund.

Remember, your investments aren't set in stone. You can, and probably should, make changes to your allocation periodically to ensure your overall portfolio - including all the other investments you have in an IRA or brokerage account - match your risk tolerance and time horizon. If you have a 401(k), you're as much an investor as you are a saver.

Need help with your 401(k) investment strategy? SmartAsset's free tool can help find a financial planner near you »

• Read more:
• Experts say your office 401(k) is the best place to start investing. Here's how it works.
• The worst thing you can do with your 401(k) when you leave a job, according to a financial expert and bestselling author
• The 2 main types of retirement accounts tax your money differently, and knowing which to use could be the key to saving even more
• 3 ways your office 401(k) gives you more money than you realize

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