Make The Most Of Your 401k

Posted on by Forest in Investing, Saving Money & Finances, Uncategorized

Make The Most Of Your 401k - When it comes to investing and especially things like one’s 401k so many people are looking for that magic formula, the loop hole that everyone else on the planet has missed but sadly, as far as I am aware, such a thing does not exist but that does not mean that there is not some very sound advice for making the most of any kind of investments, especially the 401k.

Make The Most Of Your 401k

Make The Most Of Your 401k

401k’s can be tricky and as the first wave of 401k retirees are finding there can be shortfalls if you don’t take full advantage of contributions work with all the benefits such plans can offer. Emily has written about 401k’s a few times here on the blog and she has some excellent tips that i thought would be worth sharing with you.

From the article Increase Your 401k Savings Emily writes:

1. See if your company offers a better performing 401k and switch if you can.
2. Find out what your employer matching is and take full advantage of this by putting as much as you can into the 401k and taking advantage of free money!
3. Avoid tax penalties from the IRS by keeping your yearly contributions below $15500.
4. Skip on small splurges and put the small amounts of money towards the 401k.

And she goes into more ideas and details in the article How to Boost 401K Returns where she talks about the benefits of getting professional help saying that a CBS study had found that people who received professional help were taught and guided in

1) A broadly diversified portfolio: Investors who didn’t receive professional help were more likely to stick to mostly company stock. Investors with help were aided in developing well-diversified portfolios that were adjusted for risk and outperformed their counterparts almost every time.

2) Finding a suitable personal level of investment risk: Professionals are able to help investors find the right amount of risk, while investors without help have a tendency to take too much risk or too little.

3) Patience and perseverance: Any form of financial investment can easily become an emotional endeavor which is why it’s important to allow professionals help guide you through the often stressful periods. Without professional help it’s easy to jump ship when times get tough, despite the fact that the market will often come back.

And in the same article she went on to add the tips.

- Contribute as much as possible so that your employer matches your contribution. You are instantly receiving a 100% return on your contribution.

- Keep your expenses cheap. If you are paying more than 1%  in expenses, tell your plan sponsor to change providers.

- As mentioned above, consider getting rid of the company stock. Many professionals say that company stock should make up no more than 10% of  your assets.

Not exactly rocket scient here but just sound advice that making the most may involve just seeing a pro and seeing what you can contribute and when and how to do that. Contributing more may seem at times like it is taking away from the daily fun of life as you won’t see that money for so long but just looking at people who are retiring with too little should be enough to get your motivation back on track!

Do you have any tips or comments to add? - Make The Most Of Your 401k

Tags: 401k, 401k investment, boosting retirement