Top Five Mistakes 401k Investors Make Often

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The number one mistake that people make when it comes to their 401k is to fail to take advantage of it.
It is incomprehensible that there are working Americans who turn down free money from their employer.
If your company wants to contribute money to your retirement by all means let them.
It would be too your advantage to put money of your own into this tax-free account.
The next biggest mistake that people make is to pull money out of their retirement accounts prematurely.
Most 401k plans have provisions for loans or hardship withdrawals but you should only be tapping into this money as a last resort.
There are severe tax penalties that come with early withdrawals from these plans.
Not only will you have to pay taxes on the money that you get but you will also have to pay a penalty for withdrawing the money.
Borrowing from the plan does not carry the same tax liabilities as a hardship withdrawal but it is still one of the top five common mistakes that 401k investors make.
When you take money out of your account, you are dealing a serious blow to the funds ability to grow into a nice nest egg by the time you reach retirement.
For example, if you are 30 today and make $50,000, a five percent contribution with a company match will grow into $750,000 by the time you reach retirement age, if you leave the money alone and earn an 8% annual return on your investment.
Mistake number four is over analyzing your investment portfolio and moving money around.
Remember, the 401k is a long term investment plan and you should resist the urge to try and manage it on a day to day basis.
Select solid balanced funds to invest in and then leave it alone.
Finally, the fifth most common mistake is not to start taking money out when you reach retirement age.
The government insists that you start cashing out when you reach 70 and a half, so it is critical to set up a distribution plan.
You can collect payments once a month or once a year.
The key is to try and select an amount that will last you throughout your golden years.
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