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10 Ways to Invest Outside of Your 401(k) in 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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So you’ve got plans to max out your 401(k) and your emergency fund is cash-flush. What next?

You have plenty of options, many of which we’ve listed below. Wherever you put your money, remember that each type of investment comes with drawbacks. You should understand your risk tolerance and be comfortable with the potential pitfalls involved before getting started with a new investment. Asset diversification is a way to offset the potential risks — do not put all your eggs in one basket. If you are looking to diversify your assets, here are 10 ways to invest outside a 401(k). We’ve put them in order (roughly) of how complicated it is to get started with these investment strategies.

Upgrade your savings

Stashing your extra money in a certificate of deposit (CD), high-yield savings account, or money market account might be the least risky investment you can make in 2018.

The Federal Reserve has gradually raised its benchmark funds rate in 2017. The latest hike was in December, when the Fed raised the funds rate target range by 25 basis points. When the Fed rates increase, banks often raise savings rates as well. So it may be the time to upgrade your ho-hum deposit accounts.

Most accounts are insured by the Federal Deposit Insurance Corporation, a government agency, for up to $250,000. The risk with these accounts is you might not earn enough interest on your deposits to outpace inflation. If you choose a CD, you usually can’t access your money until the term ends without paying a hefty fee, so it’s probably not a good idea to lock all your savings into a five-year CD account.

You can read our reviews on CDs, online-bank savings accounts, and money market accounts with the highest yields and best perks.

Best for: Conservative investors who are not comfortable with investing in the market and those who need a place to save their emergency fund.

Get an automated micro-investing app

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Small savings add up quickly.

A wave of micro-investing apps have allowed users to invest spare money in small amounts in selected exchange traded funds (ETFs), which are securities that track a basket of stocks, bonds, commodities, or indexes — like the S&P 500 index, for instance. You can often select a ready-made portfolio depending your risk tolerance and invest as little as $5 each day.

Take Acorns as an example: It automatically invests a small amount of your money daily, weekly, or monthly. One of Acorns’ interesting features is rounding up your purchases to the nearest full dollar amount and makes the change available for you to invest.

Let’s say you used a credit card to buy a cup of coffee for $2.75. You can choose to invest the 25 cents on the app, or Acorns will invest the change for you if you elect automatic-roundup investments. It’s free to open an Acorns account. The app charges $1 per month if your balance is under $5,000, or 0.25 percent per year if your balance is $5,000 or more.

We’ve reviewed four micro-investing apps. Read more about their features here.

One thing to note: These apps target investors saving small amounts of cash, so you want to make sure the fees don’t eat into your returns. As a reference, the average ETF fee is 0.24%, and the average for target-date funds is 0.71%, according to Morningstar. So, it really doesn’t make much sense for you to pay $12 a year if you only invest $200 a year through Acorns — the fee would be a sky-high 6%.

Best for: People with cash sitting idle in their checking account. And those who have the best intention to save but struggle to get over the emotional barrier. The automated apps help you save spare money and potentially grow it through investing.

Open a Roth IRA

Consider opening a Roth IRA if you have maxed out your 401(k) or you are simply not happy with the investment choices in your plan.

It’s a more flexible retirement investment vehicle, especially for early-career professionals, than a 401(k), according to financial planners. With a Roth, you save after-tax dollars. Money invested in a Roth grows tax-free, and you can withdraw your original contributions — but not the earnings — before retirement without tax consequences or penalty. Many parents also make it a piece of their college savings plan, thanks to its tax efficiency.

The total allowable amount contributed to a Roth is $5,500 for 2018 ($6,500 if you’re age 50 or older). The IRS does have income limitations for who is eligible for a Roth IRA. Check if you qualify for a Roth here.

Best for: Young professionals who expect their incomes to rise as their careers advance, or their tax bracket to stay the same in retirement as it is now. Parents saving for their children’s education.

Health savings account (HSA)

Experts say an HSA is one of the most tax-favored, yet underused, investment vehicles.

People with a high-deductible health plan (HDHP) are eligible for a tax-advantaged Health Savings Account. Pros highly recommend that those who have an HSA use it not just as a medical fund for unexpected emergencies, but also as a long-term retirement savings account.

HSA has a triple-tax benefit: The money you put into an HSA is tax-deductible; the balance grows tax-free and rolls over each year; and withdrawals from your HSA for qualified medical expenses are not taxed. There are a variety of HSA investment options, from regular savings accounts to mutual funds.

The annual maximum HSA contribution in 2018 is $3,450 for an individual and $6,900 for a family. If you are at least 55 years old, you can contribute an additional $1,000 annually. Experts suggest you max it out if you can, given its triple-tax benefits. While you must have a high-deductible health plan to contribute to an HSA, you get to keep and use the funds even after you’ve changed insurance coverage.

You can search for HSAs on DepositAccounts.com, which, like MagnifyMoney, is a subsidiary of LendingTree. This may help you navigate the hundreds of plan providers out there.

Best for: People who have a high-deductible health plan.

529 plans

A 529 savings plan is a tax-advantaged savings account designed to encourage saving for qualified future education costs, such as tuition, fees, and room and board. Much like a 401(k) or IRA, a 529 savings plan allows you to invest in mutual funds or similar investments.

It used to only be eligible for college expenses, but under the new tax law, you can now use 529 savings for private K-12 schooling. Tax benefits are now extended to eligible education expenses for an elementary or secondary public, private, or religious school.

The new rules allow you to withdraw up to $10,000 a year per student (child) for education costs.

Edward Vargo, an Ohio-based financial planner, told MagnifyMoney that 529 plans are “excellent legacy planning tools” for one’s grandchildren or great-grandchildren.

One drawback of a 529 plan is that earnings withdrawn not used for qualified education expenses will be taxed, and an additional 10-percent penalty is applied. So parents should thoroughly evaluate the expenses that might be needed to fund education down the road.

Best for: Parents, grandparents, or couples planning on having children.

Education

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If you want to advance your career, move up the ladder, or increase your earning potential, consider furthering your education.

To be sure, going back to school is a big time and financial commitment. Be prepared for a time period of uncertainty and income drop if you quit a full-time job to pursue a degree, which may require a lifestyle adjustment. But knowledge is invaluable, and there’s potential for an economic return, as well. A 2014 Georgetown University economic analysis of college majors found that obtaining a graduate degree leads to a wage bump.

Biology and life science graduate degree holders make a median of $35,000 more with a graduate degree, for instance. The median salary of those with an advanced degree in humanities and arts is $18,000 higher than their counterparts with a bachelor’s degree.

Investing in your education doesn’t necessarily require dropping everything to go back to school, either. Pursuing an unfinished degree on a part-time basis, attending professional workshops, taking ongoing education courses, or learning a new language could also be worth your time and money, depending on your career.

Best for: Professionals in fields where an advanced degree is highly preferred or those looking to advance their career or switch careers.

Open a brokerage account

If you’ve paid off your credit card debt, established an emergency fund, and exhausted all your tax-advantaged accounts, you can open a regular old brokerage account to squirrel away some more money.

A brokerage account is much like an IRA. It’s more flexible in terms of investment choices and money withdrawal than 401(k)s, but you don’t get any tax breaks. It allows you to buy and sell a wide variety of securities, from stocks and bonds to mutual funds, currency, and futures and options contracts, through a brokerage firm.

You can open a brokerage account with any of the major investment firms like Vanguard,Charles Schwab, or Fidelity. Just like with other financial accounts, you deposit money and work with a broker to buy or sell securities. The broker will recommend investments depending on your personal financial situation and goals. But you have the final say on investment decisions. The brokerage firm takes a commission for executing your trades, and there are fees linked to the transactions, ranging from account maintenance fees and markups/markdowns to wire fees and account closing fees.

Be prepared for a steep learning curve as a market newbie. You will have to study how each financial instrument works and the companies you invest in, such as learning to read their quarterly financial reports. Holding a brokerage account is also a big-time commitment. Although a broker will help you make investment decisions, you will have to stay on top of the daily market movements and news that may impact the market to make sure you are making a profit.

Best for: Aggressive investors with high-risk tolerance and extra savings.

Invest in real estate

The housing market poses a rosy picture in 2018. Nationally, home prices rose more than 6 percent in 2017, according to the S&P CoreLogic Case-Shiller Indices. Across the country, demand for houses is high while supply is tight.

It’s a good place to tap into if you are looking to diversify your portfolio.There are a couple options. If you want to get hands-on, you can buy a home and rent it out, flipp houses, or rent out your existing home. Or if you don’t want to be quite so involved, investing in Real Estate Investment Trusts (REITs) is another option.

If you are buying a property, experts advise you put the down payment funds in a fairly liquid account, so that it’s immediately available when you need to make a purchase.

Whichever way you choose to invest in real estate, you want to keep up with the latest economic trends, especially the real estate market. For example, you may want to read the real estate market outlook PwC published for 2018.

Unlike many other highly liquid investments, properties cannot be bought and sold for profit in a heartbeat. You want to set aside cash for other life expenses before jumping into real estate, because you are likely to hold the property for a long time.

Best for: Investors with a large sum of cash to cover a down payment and those who understand the real estate market.

Invest in a business

You may think it’s a type of venture only the super rich or a venture capitalists can do. Well, not necessarily.

The Securities and Exchange Commission in 2015 approved crowdfunding rules that allow startups or small businesses to seek investors through brokers or online crowdfunding platforms. This basically means, ordinary Joes can now buy into startups now.

A parade of online equity crowdfunding platforms allow non-accredited investors to put money in small businesses and startups. MicroVentures, DreamFunded, SeedInvest, StartEngine, and Wefunder are among those.

But tread carefully. Entrepreneurship gives hope and excitement, but investing in small businesses and startups is risky.

Make sure you do homework before starting a venture. Familiarize yourself with the process and understand the risks. You also want to research the company thoroughly, and understand its management structure and the product or service it offers. Basically, read up on anything you can to find about the company you buy into.

Because of the risks involved, the SEC put a cap on how much you can invest in those businesses through crowdfunding depending on your net worth and annual income. Check the limitations here.

Best for: Adventurous investors who are comfortable with the potential risks, passionate about entrepreneurship, and willing to spend time studying the businesses they invest in.

Wait, but what about Bitcoin?

Investing in the extremely volatile Bitcoin is so risky that it has the chairman of the U.S. Securities and Exchange Commission on guard.

Bitcoin has had a wild ride. Its value skyrocketed from $1,000 to $19,000 in 2017, often moving thousands of dollars a day. And it’s been in the news constantly. But, as with any high-risk financial move, you shouldn’t invest unless you are willing to lose it all. There are no consumer protections on Bitcoin. If Bitcoins are lost or stolen, they are gone forever.

That being said, if you are curious about it and want to learn how it works, you can throw in $20 or $100 to buy through a digital currency exchange or broker. You can read more about the cryptocurrency craze in our ultimate Bitcoin guide.

Best for: Curious investors willing to experiment — and potentially lose.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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What Are Equities and Should I Invest in Them?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Equities are shares of ownership in a company. Equity is just another way to describe stock — you’ll hear people use the terms “equity markets” and “stock markets” interchangeably. Investing in equities can be one of the best ways to build your long-term savings. This article covers the basics of what are equities, how do they work and what else you should know about investing in this market.

Equities are how you invest in the stock market

The broad equities definition is the value of a property or a business to the owners after subtracting debts. When you buy a house and begin making mortgage payments, you build home equity, which is the value of your property that you own outright.

Publicly traded companies, like Nike and Tesla, sell shares of their equity to investors to raise money. When you buy a company’s equity — aka its stock — you become a partial owner of the company. This comes with several benefits, including dividends.

Equities pay dividends

As an equity shareholder in a company, you are entitled to a share of its profits based on how much of the company’s stock you own. Companies from time to time will send their shareholders a cash payment called a dividend. The frequency of it depends on the company’s strategy.

Newer growing companies like Uber typically do not pay much in dividends because they reinvest their cash in operations to keep growing. On the other hand, established companies like Coca-Cola focus on paying more dividends to shareholders. So how do you start buying equities as an investor?

The equity market

Investors buy and sell equities from each other through the equity market. When you watch financial news and hear people talking about stock markets, this is what they mean. Some of the larger equity markets in the United States include the New York Stock Exchange and the Nasdaq.

If investors believe a company is doing well and will earn higher profits in the future, the price of its equities will go up. On the other hand, when a company runs into financial trouble, the price of its equities will fall. To access the equity markets, you sign up for a broker who will process your buy and sell trades. We list some of the best online brokers on our site you can use.

Common equity vs. preferred equity

A company can sell two types of equity to investors: common and preferred. With common equity, you earn money when the stock price goes up and when the company issues dividends. You also get the right to vote on certain company matters, like picking the board of directors.

Preferred equity has a few differences. First, preferred stock typically pays a fixed dividend rate, so you get money each year. On common stock, the company can choose when to pay dividends and it might not be every year.

Another difference is if the company ends up going bankrupt, they legally have to pay out preferred equity shareholders first — before they distribute whatever’s left of their remaining money to common shareholders. The downside of preferred equity is that it does not have voting rights. It’s also rarer. While you may be able to buy preferred stock for some companies, most shares on equity markets are common equity.

Why should you invest in equities?

Equities can be one of the most effective ways to build wealth and save for retirement. Over the past few decades, they have posted one of the highest average annual returns, better than other investments like bonds or gold.

By regularly saving money and investing in equities, your savings will benefit from compounding, which is simply where your money makes money. A dollar you put aside now could double, triple and possibly become more valuable in the future thanks to your investment gains.

On the other hand, if you just kept your savings in cash or a bank account with no interest, they won’t grow. This actually decreases your future buying power because of inflation, as prices go up over time. By growing your money with equities, you put yourself in a stronger position in the future while also generating income for today with dividends.

Finally, you can receive tax benefits by investing in equities using a retirement plan, like a 401(k) or a traditional IRA. You can deduct the amount you contribute to these accounts. You save on taxes today while putting aside money for the future. These accounts also delay taxes on your gains, so you don’t owe tax until you take money out.

What is an equity fund?

As a beginner investor, it can feel intimidating figuring out which equities to buy. One way to make things easier is by buying into an equity fund, which is a mutual fund that invests in stocks. Equity funds are mutual funds that combine the money from many small investors to build a large portfolio of different equities. The portfolio is then managed by a professional to meet the fund goals. Some common types of equity funds include:

  • Index fund: Index funds look to mimic the performance of an equity market, like the S&P 500. Rather than trying to guess the top performers, they buy shares of all the companies listed to keep costs low and track the average market return.
  • Active equity fund: In an active equity fund, the manager tries to find and buy the best equity shares in a market to hopefully earn a higher return. Fees can be higher on these funds though versus index funds.
  • Growth equity fund: These funds invest in companies focused on growth, meaning they aren’t paying as much in dividends with the long-term goal to grow their stock price by more.
  • Dividend equity fund: In comparison, dividend equity funds focus more on companies that generate income. Their share price may not grow as much long-term, but they generate more consistent dividend payments.
  • Sector-focused equity fund: Equity funds can also target companies in a specific part of the economy, like energy companies or health care companies.

How does shareholders’ equity work?

Shareholders’ equity shows how much value would be left for a company’s shareholders if it used all its assets (everything it owns) to pay off everything it owes (debts/liabilities). If the company had to shut down today, they would distribute this remaining money to their shareholders.

When a company has high shareholders’ equity, it means that it has more than enough assets to cover its debts. This could be a sign that the company is profitable, shown by a high level of retained earnings on the balance sheet. On the other hand, it could also mean that the company has raised a lot of money from investors. However, if a company has negative shareholders’ equity, it is running into financial trouble because it doesn’t have enough assets to pay off its debts.

How to calculate shareholder equity

Publicly traded companies release their financial statements so investors can check their performance before buying. They list their total shareholders’ equity on the balance sheet so you can look it up there.

You can also do the calculation yourself by adding up all the listed assets, then subtracting all the company liabilities on the balance sheet. If a company has $200 million in assets and $150 million in liabilities, its shareholder equity is $50 million.

You might get equity from your employer

Besides buying shares on the markets, you could also receive equity from your employer. Sometimes they just give shares directly through an equity grant. You could also receive equity stock options, where you are guaranteed to buy shares of a company’s equity at a set price.

If the market price goes higher than that, your options make money. For example, if your employer gives you the option to buy shares at $50, then if the market price goes to $80, you could cash in your option for a $30 per share profit.

When employers offer equity in a compensation package, they usually do so to reward loyal employees. You may need to work a minimum number of years to receive all your equity grants — for example, an employer may offer 1,000 shares, but you only get 20% for every year worked, so you’d need to stay on for five years to earn it all.

If you have any more questions about what are equities, which ones you should pick or your company’s compensation package, consider speaking with a financial advisor. They can help you plan your investments and figure out what role equities should play in reaching your long-term goals.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Review of Voya Investment Management

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Voya Investment Management is a New York-based registered investment advisor that manages investments for institutions and individual clients. With 206 investment advisors, Voya Investment Management covers a wide range of investment strategies, including equity, fixed income, real estate and hard currency.

All information included in this review is accurate as of March 18, 2020. For more information, please consult the Voya Investment Management website.

Assets under management: $108,248,624,160
Minimum investment: $1,000, no minimum on some investment types
Fee structure: Assets under management
Headquarters location: 230 Park Ave New York, NY 10169
https://investments.voya.com/
212-309-8200

Overview of Voya Investment Management

Voya Investment Management got its start in 1972 when it was known as Aetna Capital Management. For many years the firm was a subsidiary of Amsterdam-based ING Holdings. But when ING began divesting its U.S. retirement, investment and insurance business in 2013, the firm rebranded to Voya, an abstract name meant to evoke the image of a “voyage.”

Today, Voya Investment Management Co. LLC is a registered investment advisor and is a wholly-owned subsidiary of Voya Holdings, which is in turn a wholly-owned subsidiary of Voya Financial Inc. (VOYA), a publicly traded company.

What types of clients does Voya Investment Management serve?

Voya Investment Management largely caters to institutional clients in its role as an advisor and sub-advisor. The firm manages the investments of other investment companies. In addition, Voya provides investment management directly to state and municipal governments, insurance companies, corporations, pensions, charitable organizations and banks and thrift institutions. Only about 2% of the amount of assets Voya manages is on behalf of individual investors.

Voya primarily charges a percentage of assets under management, though the firm also charges performance-based fees in some instances.

For institutional clients, Voya’s minimum ranges from $25 million to $100 million. Investors in R share classes, available through qualified retirement accounts, have no investment minimum. When it comes to mutual funds for individual investors, Voya typically has a $1,000 minimum.

Services offered by Voya Investment Management

For individual investors, Voya has a lineup of over 40 mutual funds covering such diverse asset classes as equities, infrastructure, real estate, hard currency and bonds. In addition, the company maintains a roster of target-date funds whose end dates range from 2020 to 2060 in five-year increments.

Alongside traditional mutual funds, many of these strategies also come in 40 variable portfolios that are available exclusively within variable annuity contracts.

Voya also provides portfolio management services to investment companies, small businesses, pooled investment vehicles, large businesses, selection of other advisors including private mutual fund managers and publications and newsletters.

For individual investors, Voya provides the following services:

  • Portfolio management
  • Selection of portfolio managers
  • Wrap programs
  • Publications of newsletters

How Voya Investment Management invests your money

Voya runs a number of index funds and strategies. For actively-managed strategies, Voya seeks to uncover value before the rest of the market. Voya uses the insights of its analysts for fundamental research into these hidden opportunities.

In addition, Voya has a number of equal-weighted funds. Unlike market-weighted portfolios, the strategy most index funds follow, equal-weighted funds allocate the same amount of assets to each name in the portfolio. The strategy is intended to minimize concentration in the market’s largest companies. Voya’s Corporate Leaders 100 and Global Perspective are two funds that employ this strategy.

In fixed income, Voya applies a macro view alongside bottom up security selection. In addition, Voya applies environmental, social and governance factors in its security selection when the managers believe it’s appropriate.

Portfolio/Fund Name Investment Strategy
Voya CBRE Global Infrastructure Infrastructure
Voya Corporate Leaders 100 Large Blend
Voya Diversified Emerging Markets Debt Emerging Markets Bond
Voya Emerging Markets Hard Currency Debt Emerging Markets Bond
Voya Floating Rate Bank Loan
Voya GNMA Income Intermediate Government
Voya Global Bond World Bond
Voya Global Corporate Leaders World Large Stock
Voya Global Diversified Payment World Allocation
Voya Global Equity Dividend World Large Stock
Voya Global Equity World Large Stock
Voya Global Multi-Asset World Allocation
Voya Global Perspectives Fund World Allocation
Voya Global Real Estate Global Real Estate
Voya High Yield Bond High Yield Bond
Voya Intermediate Bond Intermediate Core-Plus Bond
Voya International High Dividend Low Volatility Foreign Large Value
Voya Investment Grade Credit Corporate Bond
Voya Large-Cap Growth Large Growth
Voya Large Cap Value Large Value
Voya MidCap Opportunities Mid-Cap Growth
Voya Mid Cap Research Enhanced Index Mid-Cap Blend
Voya Multi-Manager Emerging Markets Equity Diversified Emerging Markets
Voya Multi-Manager International Small Cap Foreign Small/Mid Blend
Voya Real Estate Real Estate
Voya Russia Miscellaneous Region
Voya SMID Cap Growth Mid-Cap Growth
Voya Securitized Credit Multisector Bond
Voya Short Term Bond Short-Term Bond
Voya SmallCap Opportunities Small Growth
Voya Small Company Small Blend
Voya Strategic Income Opportunities Nontraditional Bond
Voya Target In-Retirement Target-Date Retirement
Voya Target Retirement 2020 Target-Date 2020
Voya Target Retirement 2025 Target-Date 2025
Voya Target Retirement 2030 Target-Date 2030
Voya Target Retirement 2035 Target-Date 2035
Voya Target Retirement 2040 Target-Date 2040
Voya Target Retirement 2045 Target-Date 2045
Voya Target Retirement 2050 Target-Date 2050
Voya Target Retirement 2055 Target-Date 2060
Voya U.S. High Dividend Low Volatility Large Value

Fees Voya Investment Management charges for its services

Typically, Voya Investment Management charges a percentage of AUM to manage clients’ money, though sometimes Voya has other billing arrangements in place.

For individual investors in Voya’s mutual funds, fees range from around 0.50% for the target date funds to 2.00% for the Voya Russia Fund. In addition, the A shares of the firm’s funds levy a 5.75% maximum upfront commission. However, investors can have the front-end load amount reduced with higher deposit amounts.

In addition, Voya also provides wrap program services to broker-dealers. If Voya is selected to be the investment, clients will pay one fee to their broker-dealer for Voya’s service and Voya bills the broker-dealer. In those cases, Voya charges less to the broker-dealer for its services than it would normally charge. However, clients may pay more than going to Voya directly.

Equity Funds Class A Shares Commissions
Total balance Fee
Up to $49,999 5.75%
$50,000-99,999 4.50%
$1 million-249,999 3.50%
$250,000-$499,999 2.50%
$500,000-999,999 2.00%
Over $1 million 0.25%-0.35% 12b-1 fees and 0.25% tail fee for 13 months
Fixed Income Funds Class A Shares Commissions
Total balance Fee
Up to $100,000 2.50%
$100,000-$499,999 2.00%
Over $500,000 N/A

Voya Investment Management’s highlights

  • Covers all bases: Voya’s investment lineup is exhaustive. In addition to typical asset classes, such as equities and fixed income, Voya also has offerings in alternative investments like real estate, global real estate, hard currency and Russian companies. Sophisticated investors who want exposure to these niche areas will be able to complete their portfolios, however, they might be assuming additional risk.
  • High customization: In separately managed accounts, Voya will tailor investments to the individual needs of its clients, such as excluding certain industries and securities if clients have an objection or emphasizing environmental, social and governance factors for those who prioritize that in their investments.
  • Best place to work: Over the years, Voya Investment Management has landed on several lists as a best place to work. For example, in 2019, the firm made it to Pension & Investment Magazine’s “Best Places to Work in Money Management” for the fifth consecutive year. In 2018, the firm was recognized as a “Best Place to Work for Disability Inclusion” by the American Association of People with Disability and the U.S. Business Leadership Network.
  • Low fees: While the gross expense ratio of Voya’s mutual funds seem high, the firm has contractually agreed to waive certain fees. As a result, many of Voya’s mutual fund fees are classified as either “below average” or “low” by Morningstar, the fund research company. On the other hand, A shares of the funds carry a 5.75% upfront commission.

Voya Investment Management’s downsides

  • Few offerings for individual investors: Voya Investment Management’s services are limited to investment management and don’t include financial planning. Further, its focus on institutional investors and high net worth clients mean that individuals who want to invest in Voya funds will first need to find a financial advisor (and pay a commission) to help them invest.
  • Collects performance fees: Voya’s use of performance fees could potentially push portfolio managers to take on additional risk in an effort to boost performance.
  • Potential conflicts of interest: Some Voya Investment Management employees are also registered representatives of Voya Investment Distributors and can receive a commission for the sale of investments managed by Voya. This creates an inherent conflict of interest since these representatives receive financial remuneration for their recommendations.
  • Could be on the auction block: Voya Financial, the parent company of Voya Investment Management, held talks to sell itself in late 2019 with several big insurance companies. Though the talks didn’t result in a sale, there’s speculation that the firm could be on the market with private equity companies in the mix of potential buyers. A sale could result in some disruption for investors as the company transitions from one owner to another.

Voya Investment Management disciplinary disclosures

In 2013, two directors of ING Pomona Private Equity, a closed-end fund of funds and a Voya affiliate, organized in Luxembourg, ran afoul of Luxembourg securities regulation when they failed to file the annual financial statement in a timely manner with the Luxembourg Commission de Surveillance du Sector Financier. The fund received a fine of 2,000 euros. The directors argued that they are not engaged in day-to-day fund activities such as filing annual statements. What’s more, since the fund is a fund-of-funds, it must first receive financial statements from the underlying portfolios in order to file its own annual statement. Besides the monetary fine, there were no other actions taken.

Voya Investment Management onboarding process

To access one of the Voya funds or strategies you’ll need to go through an intermediary, whether that’s a financial advisor or a retirement plan at work. You can get a prospectus for a Voya Investment Management fund by calling 800-992-0180.

Is Voya Investment Management right for you?

Voya has a wide range of investment options that can be the backbone of most people’s investment portfolios. It’s suite of below average and low-fee funds (after sales charges) speak favorably of the line.

However, because Voya’s primary business is institutional, individual investors can only access Voya’s investment strategies through an intermediary such as a financial advisor or in a workplace retirement plan. Advisors who sell Voya funds collect an upfront commission, giving them a financial incentive to do so. Investors need to weigh whether the added cost, plus the potential conflict of interest, are worth it.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.