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The process of choosing among the investment options available through your 403(b) retirement plan should not be complicated. But you need to evaluate the opportunities for reward as well as the potential risks of each investment.

Risk vs. Reward
Each type of mutual fund has the potential to fulfill a different investment objective and entails a different degree of risk. In general, lower-risk funds yield less return, while higher-risk investments have the potential to yield greater returns.

Low risk/low return. Money market funds are best suited for investors who want to maintain the present value of their investments. However, to maintain your purchasing power, your investments must keep pace with inflation.

Moderate risk/moderate return. Bond funds typically offer higher returns than money market funds, but the value of your account will fluctuate with interest rate and market changes.

Moderate to high risk/moderate to high return. Stock funds offer the greatest potential for higher returns over a long time period, but the value of your account will increase and decrease with the changing outlook for specific companies, industries or the market in general.