Employee Benefit Plans: The 411

Valuable Information on 401ks, Pensions, ESOPs, Form 5500 Preparation + More

401(k): Simple steps to invest in your future

401(k), invest in your future, employee benefit plans, retirement plansEverybody always hears how they need to invest in their 401(k) as soon as they start working. Other than that initial advice, further guidance usually is not provided. Investing in a 401(k) is undoubtedly good advice, but investing in a 401(k) (or anything for that matter) should be a much different experience for someone just getting into the workforce compared to someone approaching retirement. After all of the planning and investing over the years to reach retirement, what will your net worth number be once it is revealed from the dark and “LIT UP?” The five points below will help you navigate some tough questions that you may face.

  • Live beneath your means – The easiest and best investment advice is not actually on investing at all. No matter age, location, or lifestyle, if you simply spends less than you make, you already are limiting your net worth’s ability to go on a roller coaster ride and reduce the possibility of financial stress in the future.
  • Investigate your future – Once you have established that you will be living beneath you means, it is time to put in the work. It is up to you to research and investigate all the different paths you can take to grow you net worth. Whether it is a 401(k) through work, the stock market, real estate, gold, etc., the internet is at your fingertips with countless sites and platforms. Not only can you be informed on different pathways to take, you can learn how to combine those investments into one location to get a clearer picture of your overall portfolio. When it comes to financial future, you should do everything in your power not to leave something so vital to chance. Due diligence is needed to do yourself a favor.
  • Target your objective – What is the end goal? Whether you want to travel the world, provide for your parents/kids, buy a penthouse in Manhattan, etc., setting goals (no matter how ambitious they may be) gives you something to work toward. It is easy to have a mindset in a moment in time. It is much harder to stick to it. The more established a target, the higher the likelihood it will be hit.
  • Tolerate Uncertainty – Once adequate research has been done and goals have been set, you have to estimate the time, dollar amount and risk necessary to attain those goals. If the goal is too lofty and results in riskier investing than you’re comfortable with, the goal should be altered. Many agree that investing in a 401(k) achieves a greater balance in their lives than investing in stocks. Even though you invest in the hope for a better future, being unhappy and stressful in the present is not worth the tradeoff. Research your options, set goals and maintain the balance.
  • Performance – Investing should always be viewed as long-term. Not only for a better chance at growth, but also for personal well-being. Performance of your net worth should be monitored, but not checked daily. Unless it is a finite investment that spans less than a year’s time, checking your portfolio once every six months would be more than satisfactory. It gives you an idea of where you stand, how inline you are with your goals, if any changes need to be made, and helps keep you from making rash decisions.

Investing in your future should be enjoyable, not stressful. Do the homework that is needed now so future opportunities can be exploited. It is not about the finish rather the journey you take to get there. When it’s all said and done and the moment of truth presents itself, what will your number be when it is “LIT UP?”

CJ McGrady