The percentage of individuals owning shares in stocks or mutual funds has never been higher. One reason is the relative ease with which information and transactions can be handled online. The other reason is more and more employer-sponsored retirement plans are offering participants the option to invest their contributions directly into mutual funds and individual stocks of their choosing.

This is what’s known as the brokerage option. Is it right for you? Possibly.

Keep in mind the stock market doesn’t care where the money from your investments comes from. There are some important considerations on your end that we’ll get to in a moment. Before you hop out of the cab on Wall Street with a fistful of cash, you might want to ask yourself a few questions:

* Am I willing to see the value of my retirement account fluctuate?
* Do I accept the possibility that I could lose most or all of my market investments?
* Do I understand or care how financial markets work? How mutual funds work?
* Do I like spending time tracking the performance of my investments?
* Would I know when it is a good idea to buy or sell shares or to move money in or out of certain mutual funds?
* Do I understand why higher risk usually accompanies higher return? How a diversified portfolio manages that risk?

These are the kinds of things professional investment advisors think about every day as they make decisions in the best interests of retirement plan participants. By choosing to manage your own investments, you are taking much of that responsibility on yourself.

If you answered yes to these questions, a brokerage account may be an excellent option. If not, there’s no reason to rush into the market on your own. It’s important to realize the vast majority of retirement plan participants are unlikely to obtain a significant financial advantage by managing their own investments. Often, people merely increase their risk without realizing how difficult it is to beat the market.

On the other hand, if the opportunity is available, you might want to consider small steps in that direction. You can risk being too conservative by missing out on opportunities for your portfolio to grow with the market. Most plans with a brokerage option offer a wide range of mutual funds. Your plan administrator should have information available to help you get started with fundamental investments decisions.

And that brings us to the two main differences between investing inside and outside of qualified retirement accounts: taxes and time.

The money you put in your qualifying retirement account is typically tax-deferred. This simply means you don’t pay income tax on that money until it is withdrawn. The interest or gains realized when market investments are sold are also not taxed until the money is withdrawn.

By contrast, returns on investments made outside your retirement plan with after-tax money are taxable in the same year they are realized.

In general, retirement investments are long term. This gradually changes, of course, as you approach retirement. But your investment “window” is an important component of any successful strategy.

Aggressive investments are designed to become less risky over the long term because their volatility often has a chance to even out.

At the same time, more conservative investments may have the time to compound into significant balances.

All of this simply means that investing for retirement can and should be done with specific long-term goals in mind. How you get there depends more on you than it does on the market. And that’s a good thing!