401Ks are very personal. Investment decisions are made based on age, level of risk you want to take on, and time before you are officially retiring. You also need to factor in income. Can you afford to invest ten to 15 percent as experts suggest. You need to determine your level of risk and then move forward on investments. Diversification helps spread your money around between stocks and bonds and better protects your assets. Pick your allocation investments and then review yearly. Do not try to micromanage your assets.
Invest what you can and try to max on your employers contribution. It cuts your tax rate and gives you maximum benefits for your money.
One of the most important things is to leave the 401K alone. If you borrow against it the benefits of having it are gone. It no longer is growing for you. If you change jobs it is tempting to cash it out, but if you are under 59 1/2 you will pay a 10% penalty for doing so.The bottom line is to pay yourself first and then watch it grow over time.
- As you are young, you should really take advantage of the benefits that your 401k can offer you.
- You need to make sure that you are not too invested in one particular stock or you can get hit hard.
- Be safe and smart with your money as in the long run, it really does pay off.
“An aggressive growth fund is always looking for the next Apple, but may find the next Enron instead. You could get rich fast or poor faster. In fact, over time the fund may swing wildly between big gains and big losses.”
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