If you want your money to work as hard as you do, then it is important to know how to maximize your investments and get the most out of your retirement plans. Many people have funds in an employer sponsored 401k plan and getting the most out of this fund can be the key to a comfortable retirement.
There are some key factors to keep in mind when investing in these tax-advantaged accounts including keeping costs low by investing in 401k plans with mutual funds, as well as contributing as much as you can comfortably afford to your account.
You might be surprised at how easy it is to get the most out of your 401k account. While there are also drawbacks to investing in these accounts, there is one major benefit that makes these accounts worth investing in. Consult with a financial adviser, such as the experts at ETrade to find out which path to retirement investing is best for you.
Easy Ways To Get The Most Out Of Your 401k Plan
The first step to building your financial future is to simply enroll in your company’s 401k plan. Studies show that there are millions of eligible employees that do not invest in their company’s plan. It is easy to enroll in a 401k plan, as you are simply required to fill out the forms and submit them with your plan director.
You can also increase the amount you are contributing to your 401k if you are already investing in your company’s plan. As the funds are withdrawn directly from your paycheck, chances are you will never miss the money now, and your investments can grow larger for your future.
If your employer offers matching contributions, it is advised that you invest as much as required to take full advantage of these matching funds. The money is free money in your account, and has the potential to grow by thousands of dollars while held in the account.
While there are many benefits to investing in 401k plans with Mutual Funds and other low-cost index funds, the ability to receive matching contributions from your employer is the greatest benefit and should be fully utilized whenever possible.
Invest In 401k Plans With Mutual Funds And Other Low-Cost Investments
It is also important to get the most out of your 401k investments to pick the right mutual funds and other low-cost investments. Index and Mutual Funds simply try and match the performance of the broad market or underlying index such as the S&P 500.
While this is admittedly not the most exciting path to wealth, most people find that they prefer bored and comfortable, to excited and poor!
401k plans with Mutual Funds and other low-cost investment options allow you to retain more of your capital, as these funds often have lower fees and commissions, and historically have produced the best long-term gains for buy-and-hold investors.
Additional Considerations For Your 401k Account
It is important to remember to keep contributing to your 401k account, and to monitor its performance periodically and make changes as necessary. While it is important to monitor your fund, resist the urge to withdrawal any funds from it as it is money earmarked for retirement, and unqualified withdrawals can carry steep taxes and penalties.
When leaving your job, it is important to take your 401k money with you. You have many options for your funds including rolling over your 401k to a traditional or Roth IRA. These retirement accounts are easy to open at discount brokerages such as ETrade and Zecco, and can allow you to continue to grow and preserve your funds for a secure financial future.