Warren Buffett explained how to manage your 401(k) in his 1996 Annual Letter to Shareholders.

“Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees.  Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals.”

In subsequent comments, Buffett went on to explain how index funds will outperform managed investments due to low fees that index funds charge.   In 2006, he placed a $500,000 wager that no one would be able to choose a better investment in hedge funds that would outperform the S&P 500 over the next 10 years.  That bet ends with 2017 and he is well on the way to winning that bet.

To follow his advice in your retirement plan, all you have to do is choose the investment choice of an S&P 500 index fund.  You don’t need to use any of the other choices.   The only caveat I would add is to monitor the Dow Gold Ratio and move your money to a money market fund or cash when the DGR starts to go down.  Since 1980, you would have only had to do this one time in the 2000-2001 time frame.   Currently the DGR is rising so look for the index fund in your plan.  You may have more than one and you may have index funds that follow other indexes, but stick the the S&P 500 funds.

Following Buffett’s advice is simple and easy to do.  You don’t have to be confused by all the more expensive choices your plan may offer.   I include a link to a book of his annual letters in the Recommended Reading section.