When I think about 401(k) investing, I focus on building a retirement portfolio that grows steadily, resists inflation, and handles market volatility over decades. Because 401(k)s are tax-advantaged and long-term by design, they’re ideal for mutual funds that compound gains over 20, 30, even 40 years. In this guide, I’ll share ten mutual funds I consider especially well-suited for 401(k) accounts based on their long-term performance, fees, management consistency, and suitability for retirement planning. I’ll also explain how to use them strategically depending on your age, goals, and risk tolerance.
Table of Contents
What Makes a Mutual Fund Ideal for a 401(k)?
A 401(k) account has unique advantages:
- Tax-deferred growth, meaning gains aren’t taxed until withdrawal.
- Automatic contributions, which allow dollar-cost averaging.
- Employer matching, which boosts your investment returns instantly.
These features make it smart to invest in funds that:
- Offer strong, long-term returns
- Have low fees (expense ratios)
- Are diversified across sectors or asset classes
- Have low turnover to minimize hidden trading costs
- Fit your target retirement date or risk tolerance
The longer your time horizon, the more you benefit from compound growth. Here’s a basic formula I use when estimating future 401(k) value:
FV = P \left( \frac{(1 + r)^t - 1}{r} \right) \times (1 + r)Where:
- P is the annual contribution
- r is the annual rate of return
- t is the number of years
If I contribute $6,000 per year with a return of 8% for 30 years:
FV = 6000 \left( \frac{(1 + 0.08)^{30} - 1}{0.08} \right) \times 1.08 = 6000(113.28) \times 1.08 = 734,515That’s nearly $735,000 in future retirement funds—not counting employer matches.
1. Vanguard Institutional Index Fund (VINIX)
Category: Large-Cap Blend (S&P 500)
Expense Ratio: 0.04%
Minimum Investment: $5 million (available in many 401(k) plans)
10-Year Return: ~12.2%
VINIX tracks the S&P 500 with extremely low fees. Many workplace retirement plans offer it instead of the retail VFIAX. I use it as a 401(k) cornerstone because it provides exposure to top US companies with virtually no drag from fees.
2. Fidelity 500 Index Fund (FXAIX)
Category: Large-Cap Blend
Expense Ratio: 0.015%
Minimum Investment: None in 401(k)s
10-Year Return: ~12.2%
FXAIX is Fidelity’s version of the S&P 500 index fund. It’s often included in 401(k) plans managed by Fidelity. The expense ratio is about as low as it gets. This is a reliable choice if your plan doesn’t include VINIX.
3. Vanguard Target Retirement 2055 Fund (VFFVX)
Category: Target-Date Fund
Expense Ratio: 0.08%
Minimum Investment: $1,000
10-Year Return: ~9.5%
If you want simplicity, target-date funds do the work for you. VFFVX adjusts its allocation automatically as you approach retirement. It’s aggressive early, with heavy stock exposure, then shifts to bonds over time. I recommend it to younger investors who don’t want to manage allocations manually.
4. T. Rowe Price Retirement 2040 Fund (TRRDX)
Category: Target-Date Fund
Expense Ratio: 0.69%
Minimum Investment: $1,000
10-Year Return: ~10.1%
Unlike Vanguard’s passive target-date funds, T. Rowe Price takes an active management approach. TRRDX has a strong track record and allocates more to equities for longer. I like it for investors in their 30s or 40s seeking slightly higher long-term growth.
5. Vanguard Total Stock Market Index Fund (VTSAX / VITPX)
Category: Total Market
Expense Ratio: 0.04%
Minimum Investment: $3,000 (VTSAX) or $5 million (VITPX for 401(k))
10-Year Return: ~11.8%
This fund holds the entire US stock market—large, mid, and small caps. It gives you more exposure than an S&P 500 fund. I use it when I want full-market coverage and don’t want to pick sectors.
6. Vanguard Total Bond Market Index Fund (VBTLX / VBTIX)
Category: US Bonds
Expense Ratio: 0.05%
Minimum Investment: $3,000 (VBTLX) or $5 million (VBTIX for 401(k))
10-Year Return: ~1.6%
Bonds are vital for older investors or those near retirement. I use this fund as a safe component. It holds a diversified mix of government and corporate bonds, giving me stability when equities drop.
Table: Equity vs Bond Fund Characteristics
| Fund | Category | Typical Use | Volatility | Yield |
|---|---|---|---|---|
| VTSAX | Total US Stock | Growth | High | Low |
| VBTLX | Total US Bond | Stability | Low | Moderate |
7. American Funds EuroPacific Growth (RERGX or AEPGX)
Category: International
Expense Ratio: 0.49% (R6 class)
Minimum Investment: Varies in 401(k) plans
10-Year Return: ~6.8%
401(k) plans often offer the R6 share class (RERGX), which is cheaper than retail versions. I include this fund for international diversification. It has a long-term track record and helps reduce portfolio dependence on the US market.
8. Dodge & Cox Stock Fund (DODGX)
Category: Value Large-Cap
Expense Ratio: 0.52%
Minimum Investment: $2,500
10-Year Return: ~10.2%
This fund goes against the grain by buying undervalued companies. It often adds stability when growth stocks underperform. I like it as a value counterweight to tech-heavy index funds.
9. Fidelity Contrafund (FCNKX – K6 Class)
Category: Large-Cap Growth
Expense Ratio: 0.43%
Minimum Investment: Varies by plan
10-Year Return: ~13.1%
Contrafund is one of the best-known active funds in the country. In 401(k)s, the K6 class (FCNKX) is offered with lower fees. It gives me exposure to large-cap growth with flexible management—ideal when I want more than index performance.
10. Schwab S&P 500 Index Fund (SWPPX)
Category: Large-Cap Blend
Expense Ratio: 0.02%
Minimum Investment: None
10-Year Return: ~12.2%
If your 401(k) is with Schwab, this fund is often included. It’s functionally equivalent to VFIAX or FXAIX and is one of the lowest-cost ways to get S&P 500 exposure.
Comparison Table: S&P 500 Index Fund Options for 401(k)
| Fund | Provider | Expense Ratio | Available In |
|---|---|---|---|
| VINIX | Vanguard | 0.04% | Institutional 401(k)s |
| FXAIX | Fidelity | 0.015% | Fidelity 401(k)s |
| SWPPX | Schwab | 0.02% | Schwab 401(k)s |
Sample Allocations by Age
Your ideal mix depends on age and risk tolerance. Here’s how I might build a portfolio inside a 401(k):
Age 25–35 (Aggressive Growth)
| Fund | Allocation |
|---|---|
| VTSAX | 40% |
| FXAIX | 30% |
| RERGX | 15% |
| TRRDX | 10% |
| VBTLX | 5% |
Age 45–55 (Moderate Growth with Stability)
| Fund | Allocation |
|---|---|
| FXAIX | 30% |
| DODGX | 20% |
| VTSAX | 20% |
| RERGX | 10% |
| VBTLX | 20% |
Age 60+ (Conservative Income-Focused)
| Fund | Allocation |
|---|---|
| VBTLX | 40% |
| VWINX | 30% |
| DODGX | 10% |
| FXAIX | 10% |
| RERGX | 10% |
Final Thoughts
In my experience, the best 401(k) portfolios are simple, low-cost, and diversified. I avoid chasing hot sectors or speculative funds. Instead, I stick with time-tested options that deliver compound growth over decades. These ten mutual funds provide a strong foundation for anyone serious about retirement planning. If your plan doesn’t include them, look for similar funds that match their structure and goals.
