First Time Investing in a 401K? 4 Tips to Make Sure Your Money Adds Up

First Time Investing in a 401K? 4 Tips to Make Sure Your Money Adds Up
  • Opening Intro -

    The 401(k) has become one of the most popular investment vehicles, and studies have shown us that just over 50 million employees have one of those retirement accounts.

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If you have recently opened a 401(k), then you should spend a little time figuring out exactly what you can do to maximize your investments.

Start Early and Stay Consistent

One of the best things that you can do for your retirement is to start saving when you are young. Even putting away a little bit of money when you are a young adult could have a huge impact on those accounts later on.

You must also stay as consistent as possible when you are investing in your 401(k). Skipping a few months or years is going to wreak havoc on your savings and potentially impact your company’s matching program.

Meet the Limit and Match Your Employer

As a general rule, you should always try to put away as much as possible in your 401(k). When you are signing up for one of those accounts, you should be able to choose the maximum contribution, and that is quickly going to add up in the coming years.

You also need to speak with an HR representative about employer match programs. Many companies encourage their employees to save by matching their contributions up to a certain amount, and that is essentially free money.

Work With an Advisor

At least a few times a year, you should try to meet with an experienced 401k advisor. Investment accounts can be very complicated, and employees need to be absolutely sure that they are making the most out of their hard-earned money. An experienced advisor can help you come up with a long-term plan for maximizing your investments while minimizing your risks.

other valuable tips:

Don’t Forget to Diversify

While 401(k) accounts can be incredibly lucrative, they aren’t the only investment vehicle out there. Most financial experts agree that employees should diversify some of their investments to avoid sudden market downshifts. Your advisor will be able to give you more information on the pros and cons of many different investment options ranging from Roth IRAs to health savings accounts.

Investing in your 401(k) is a great “first time investing” start, but you must also work on eradicating your debt. High-interest debt could counteract all of your savings, and that is why many people tackle their credit cards and loans before they put too much in their retirement accounts.

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