5 Ways You Can Help Grow Your 401k
One of the most popular questions people have about 401ks is how to grow them faster. Gone are the days when the retirement plan was in the hands of the company. Now with a 401k plan, it’s possible to take control and create a legacy that outlasts the job.
Like many others, you may be in the hunt for answers to questions about “my 401k”. Well, in this blog, we answer the most critical issue of all — how to grow 401ks.
Utilize Your Employer’s Match
Contributing as much money to a 401k as the employer can help grow it faster. In fact, failure to match employer’s payments may mean that you’re turning down free money.
For instance, say annual salary sits at $50,000. If an employer is willing to match payments of up to 6%, that’s an extra of about $3,000. Although most 401k questions center around limited options for investment and high fees, taking advantage of the employer’s match is always a plus!
Learn To Invest
To grow a 401k, it’s essential to make smart investments. Furthermore, investing with a focus on long-term growth is the best way to increase your 401k.
However, we must first learn to invest. Investing is not a concept that works based on sentiments and gut feelings. For the best return on investments, it requires careful calculations.
Therefore, start by working hand in hand with an investment professional. Over time and with proper guidance, we’ll pick up the skills necessary to invest with respect to a 401k.
Save Bonus Payments
Most people ask, does early withdrawal from my 401k have any side effects? Yes, it does. In fact, it may come with substantial tax penalties. Instead, we should be looking to optimize tax reductions and save more money.
For example, if you get a bonus payment, save more by maxing out 401k payments. Then, use the bonus to take care of monthly expenses. Retirement doesn’t have to be boring. Invest more, where possible, into 401ks.
Carry Over 401ks From Old Jobs
Some people switch jobs and go “now is the perfect time to make withdrawals from my 401k”. News flash — it’s not. Or sometimes, they just forget about it at their old jobs. This is not the way to grow a 401k.
Some people think the best way is to stash the funds and then forget about it. However, doing this can be counterproductive to the very idea of a 401k.
A 401k needs attention. Certain strategies can be put in place to grow the value of savings faster. Furthermore, there’s also the possibility of transferring a 401k to the new employer. The point is, when switching jobs, take every option into account.
A 401k is Just The Beginning
The goal of a 401k is to invest smarter and take control in readiness for retirement. However, some other strategies can also prove useful when retirement comes along. Investment accounts like an IRA may be paired with a 401k to offer more protection over assets.
Take time out to consider available options. Something as simple as listening to a podcast that discusses growing a 401k may provide helpful information. Spread assets over different income streams for better returns!
There are other options for growing a 401k. We discuss these and provide answers to common 401k questions in our periodic newsletters. Subscribe to our mailing list to learn more. Take control today!
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