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401k Investment Tips

If you happen to work for an employer who sponsors a 401K retirement program, you’ve made an important investment in your future. It behooves you as an employee to take that investment seriously. According to the 401k Help Center Website, the American Savings Education Council has reported that only 25 percent of all 401k account holders actually invest in their plans. Despite the poor economy, it is still wise to invest, albeit more carefully.

401k Investment Tips


Continue Your Contributions

Continue investing in your 401k. That’s the advice of Mark Riepe, a senior vice president of Schwab Center for Financial Research. Relying on your Social Security account to help you through your retirement years probably is unwise. According to the CNN Money website, Social Security funds most likely will begin running out by 2016, not 2040 as experts had previously speculated.


Set Long Term Goals

Do not set investment goals based on the present state of affairs; think long term. Riepe says sticking with the the investment process–despite the vicissitudes of the economy–during a period of 30 to 35 years could produce six-figure savings by the time you retire.


Keep Your Portfolio Diverse

A diverse portfolio increases your chances of possessing a decent nest egg at retirement. This involves spreading your assets across a wide range of different asset classes. The stock in your company should consume about 10 per cent of your total investments.


Conduct Annual Reviews

401k Help Center advises to take a look back at your goals, life circumstances and investment history at the end of every year. If what you see satisfies you, then continue to invest the way you have been investing. Otherwise, be willing to readjust accordingly.


Avoid Early Withdrawals

Do not withdraw from your 401k before retirement. Should you do–perhaps due to a financial hardship–you risk forfeiting the tax-free compounding feature that makes the 401k attractive. This approach could result in you forfeiting the nest egg that a 401k provides. To counter such a temptation, the 401k Helpdesk advises people to live within their means to be prepared should hardships arise.


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