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Get the Most out of 401k Matching

Your 401k plan may be the best investment you can ever make provided that your employer offers you the option of matching. If you can correctly modify your 401k plan, it can turn into a better investment than even precious metals or stocks. There is no possibility of incurring losses and 401k is not a plan that you cannot control or access.

How 401k Matching Works

Under 401k matching your employer is obliged to match a percentage of your contributions. As a result, for every dollar you invest in your 401k plan 50 cents are added to your account (50% of the amount allocated). This means that every time you put a sum of money into your 401k plan, you have 50% of the sum added to your account.

By maximizing the amount you allocate for your 401k plan, you maximize the profits you make. The more you put in, the more you will get out when you retire!

One of the advantages of the 401k plans is that they fare well even when the market goes down. So, next time the market is declining don't rush to take the money out of your retirement plan. Even though your portfolio is doing poorly, by continuing your money contributions you ensure yourself a safe up front profit.

You should check whether your employer has included a vesting schedule for the contributions made. The more time you keep the money the greater the percentage that you acquire. Therefore, after working for a certain period of time for the company, let's say a year, you will get 25% of the money the company contributes. The percentage may double if you keep the money for an additional year. No matter for how long you work for your current employer, you always retain the contributions you have made.

Final piece of advice: Make your contributions as big as possible in order to meet all the company matching!

To clarify this further, consider the following example:

Your company requires 6% contribution of your pay in order to match $0.50 on every dollar contributed. Therefore, in order to get the best out of your plan, contribute that 6%! Whenever you are allowed to contribute a greater percentage do it, but always consider your financial situation first to see whether you can afford it.

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