How to Make the most of a 401k Plan

Everyone dreams of having a secure, comfortable retirement. There are many ways to go about making this dream as much of a reality as you possibly can. Making the most of your 401(k) plan can be one of the biggest steps toward securing a comfortable retirement after you’re done working. But how can you make the most of a 401(k) plan? Here are some tips:

– Invest as much as you can afford – It’s obvious, but it’s amazing how many people don’t take advantage of a 401(k) plan. To utilize the power of compound interest, it’s vital to invest as much as you can as early as you can. There are even tax breaks involved, because the money is taken out of your paycheck before taxes. Start as young as you can and contribute as much as you can… this is the best way to make the most of your 401K plan and secure your future.

– At the very least, contribute enough to get the employer match – If you don’t, you’re just passing up free money. No matter what your employer matches, at the BARE MINIMUM, contribute that percent. Again, free money is hard to come by in this world. If your company is matching you up to a certain percent, contribute at least that percent, even if you don’t think you can afford to. Cut back in other areas, but make sure you are not passing up this free money from your employer.

– Don’t get too conservative – This is especially true if you have a long time until retirement. Don’t get too conservative with your investments… put the money in well-balanced mutual funds or index funds. The risk is a little higher, but the reward will almost certainly be worth it. As you plan to keep the money in investments for many years, you need to take the short-term risk because the stock market will almost always give you a long-term reward.

– Don’t borrow from your 401(k) – There are many reasons why this is true, but really, trust me, it’s not a good idea to borrow from your 401(k). Many people feel this temptation when financial times get tough, but it makes it much more difficult in your future if you try to borrow money from your retirement account.

Making the most of your 401(k) plan can be vital to your financial security, especially as you approach and enter retirement… these are just a few tips to make sure you’re doing all that you can! Good luck… having a successful 401K can be one of the most beneficial things you can do to secure your retirement.