Rather, 401(k)s allow you to invest in different funds. Some of those funds may be actively managed, which means you’ll pay higher investment fees (known as expense ratios). Your 401(k) might also offer a bunch of passively managed funds, known as index funds, which come with much lower fees but might not allow you to invest the way you want to.
Whether you put money into an actively managed mutual fund or an index fund, either way, you get no say in the specific stocks you own. IRAs, on the other hand, do allow you to add individual stocks, so you may want to open one on top of a 401(k).
2. You might get stuck with hefty fees
Not only might you pay investment fees with a 401(k), but you could get stuck with costly administrative fees that eat away at your returns. IRAs, by contrast, tend to charge lower administrative fees (though this isn’t always the case).
Now the good news is that 401(k) plan administrators are required to disclose their fees up front. And if you find that they’re high, you can talk to your employer about potentially switching retirement plan providers. But those fees are something you’ll need to be aware of.