One of the things you often don’t review whenever you’re looking at a job offer is whether there are attractive investment options within the 401(k) plan, usually discussion of the plan stops at how much the employer is willing to match in contributions and how long it will take to vest. Sometimes you’ll enter a situation where the investment options within the 401(k) plan are absolutely dreadful… so what do you do? Do you not invest whatsoever? What options do you have?
First off, always invest if there is an employer match – that’s free money and an immediate return on your investment that you simply can’t leave on the table. Second, carefully review the options you do have and there may be one or two in there worth going after. Usually 401k’s will have some kind of target-retirement/lifecycle fund or a balanced fund or an index fund, all three options are safe places to put your money until you decide to leave the company and roll over your 401k. If you have all three, your options aren’t actually as bad as some other 401k plans because those give you a wide range of options and most folks don’t have all three :).
Target-retirement and lifecycle funds will automatically diversify its holdings based on the target date and so you don’t even have to worry about rebalancing. The balanced fund is like a “safe” fund to keep your money in and the index fund tracks a particular index. All are good options as long as you check their fees, but in a 401k they will probably be very similar.
Lastly, remember that the 401k planners have a legal responsibility to make decisions in your best interests, if you think something is fishy, tell someone.