4. Look internationally

Many 401k plans go light on international investment options. The real reason is simply the incompetence and complacency of plan sponsors.

But if your plan offers international options, take advantage. The turmoil of 2011 has left many overseas stock markets looking like a good value.

Western European markets fell nearly 30% from last year's peak. Japan's Nikkei 225 index is now lower than it was during the tsunami panic nearly a year ago. Emerging markets from Brazil to India, the investment hotshots of 2010, have dropped dramatically out of fashion again. Their stock markets crashed last year.

These offer some excellent buying opportunities.

Emerging markets account for about a third of the world economy, and their share is growing. Developed overseas markets, meaning Europe, Japan and Australasia, account for about two-fifths. They are on sale, and most people are underinvested there.

5. Review your bond funds

As a general rule, your 401k and other tax shelters are where to hold the bond portion of your portfolio. That's because bonds are much more vulnerable to taxes than stocks.

Bonds generate most of their returns through coupons, and those are usually taxed at ordinary-income tax rates. By contrast, stock dividends and capital gains generally get taxed more lightly.

Right now is, admittedly, a risky time to invest in U.S. bonds. Yields on U.S. Treasurys have slumped to historic lows. Any pickup in the economy, and inflation, could send bond funds tumbling.

While Treasury bonds offer meager yields here, look at any corporate bond funds. That includes investment-grade bonds and more volatile high-yield bonds. Both offer somewhat better yields.

Emerging-markets bonds offer particularly good opportunities, says investment guru Rob Arnott, chairman of Research Affiliates. They pay higher interest rates than those in the United States, while their governments' finances are actually in better shape.

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It's crazy that most 401k plans offer such a limited range of investment options. Paradoxically, you don't get full control of your money unless you leave your employer, when you can roll over the plan into a self-directed individual retirement account. But your 401k still represents a great investment asset, and this is a good time to get it into shape.

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