Top 8 Best-Performing 401(k) Funds for Your Retirement Portfolio

Choosing the right 401(k) funds is vital for securing your financial future. With so many options available, it can be tough to decide where to invest your hard-earned money. This guide highlights the top 8 best-performing 401(k) funds to make your retirement planning easier. These funds have shown strong returns over time, making them reliable options for growing your savings. Whether you're new to investing or experienced, this list will help you make confident choices for your portfolio.

What is a 401(k) Fund?

Under the 401(k) fund structure employers provide their staff members with retirement saving options. A 401(k) fund enables workers to put away part of their paychecks through investment funds composed of stocks along with bonds as well as other securities. 401(k) fund contributors benefit from tax-deferred treatments since they do not need to pay taxes at the time of enrollment but rather when they make withdrawals from their retirement accounts.

Many employers provide 401(k) matching contributions since they will match specific portions of your retirement fund investment. Adopting such a savings strategy will powerfully increase your retirement fund total throughout your working years.

1. Vanguard Target Retirement 2055 Fund (VFFVX)

The Vanguard Target Retirement 2055 Fund (VFFVX) serves investors expecting retirement between 2055. This fund adopts a dynamic allocation plan where stocks dominate during early periods until it progressively transfers assets into bonds approaching the target retirement in 2055. The major investment strategy of VFFVX reveals its priority to hold Vanguard index funds which offer both extensive portfolio spread and economical management costs.

This makes it an excellent choice for long-term investors who want a hands-off approach to managing their retirement savings. With its history of steady performance and low fees, it's a popular option for those looking to maximize growth potential early in their careers.

2. Fidelity Contrafund (FCNTX)

Managed by Fidelity Investments, the Fidelity Contrafund (FCNTX) is a large-cap growth fund that has consistently delivered strong returns over time. The fund's goal is to outperform the S&P 500 index by investing in undervalued companies with potential for long-term growth. FCNTX has a well-diversified portfolio, with its top holdings including major tech companies such as Apple, Amazon, and Facebook.

This fund is suitable for investors looking for higher risk and potential for higher returns in their retirement portfolio. It may also serve as a valuable addition to a more conservative mix of funds for diversification purposes.

3. American Funds Washington Mutual Investors Fund (AWSHX)

The American Funds Washington Mutual Investors Fund (AWSHX) is a large-cap value fund that has been providing strong returns for over six decades. The fund's primary goal is to invest in undervalued companies with potential for long-term growth while also generating income through dividends. AWSHX typically holds a mix of blue-chip stocks and fixed-income securities, making it a more conservative option compared to other funds on this list.

This makes it an ideal choice for investors looking for stability and steady growth in their retirement portfolio. With its low expense ratio and experienced management team, AWSHX remains a top-performing fund among its peers.

4. Vanguard Total Stock Market Index Fund (VTSAX)

Another popular option from Vanguard, the Vanguard Total Stock Market Index Fund (VTSAX) is a low-cost index fund that tracks the performance of the entire U.S. stock market. With over 3,000 holdings, this fund provides broad diversification and has historically delivered strong returns for its investors.

VTSAX is an excellent choice for those looking to passively invest in the stock market and hold a well-diversified portfolio with minimal fees. As one of the largest funds in terms of assets under management, it's a reliable option for long-term investors.

5. Fidelity Balanced Fund (FBALX)

The Fidelity Balanced Fund (FBALX) is a balanced fund that holds a mix of stocks and bonds, providing both growth potential and income for investors. The fund's management team actively adjusts the asset allocation based on market conditions, aiming to outperform its benchmark. FBALX typically holds about 60% in stocks and 40% in bonds, making it a more conservative option for investors.

This fund is an excellent choice for those looking to balance risk and return in their retirement portfolio. With its low fees and consistent performance, FBALX remains a top-performing balanced fund.

6.T. Rowe Price Retirement Income Fund (TRRIX)

The T. Rowe Price Retirement Income Fund (TRRIX) is a target-date fund designed for investors planning to retire within the next five years. The fund aims to provide a steady stream of income during retirement while also preserving capital. TRRIX primarily invests in other T. Rowe Price funds, providing a diversified mix of stocks, bonds, and cash.

This fund is suitable for investors looking for lower risk and stable returns as they approach retirement. With its experienced management team and track record of success, TRRIX may be an excellent choice for those nearing their golden years.

7. Schwab Total Stock Market Index Fund (SWTSX)

Similar to VTSAX, the Schwab Total Stock Market Index Fund (SWTSX) is a low-cost index fund that tracks the performance of the entire U.S. stock market. Its top holdings include major companies like Apple, Microsoft, and Amazon. SWTSX offers broad diversification and has consistently provided strong returns for its investors.

This fund may be a suitable choice for those looking to invest in the stock market with minimal fees and hold a diversified portfolio across different sectors and industries.

Conclusion

Investing in the right mutual funds or index funds can play a pivotal role in achieving your financial goals, whether they involve long-term growth, stable income, or preparing for retirement. Funds like VTSAX, TRRIX, and SWTSX offer diversified and cost-effective options for investors with varying risk tolerances and objectives. It's important to assess your individual financial situation, investment horizon, and risk appetite before choosing a fund.