Let’s talk about your Investment Options For 401k?
First of all, is a 401k a good investment?
The short answer is, if you have a job in America today and your employer will match your funds then, YES. It’s a must!
If you are approaching the age of 30, you should be already thinking about retirement and looking for an investment vehicle that can sustain you through your golden years, a 401(k) in America as the standard retirement mechanism used by many companies and private individuals today.
This allows you to put aside a portion of your earned income and often with matching funds from your company invest these monies in the stock market in the form of stocks mutual funds or bonds to get the best rate of return on your money.
This is so that when you do retire, you have enough saved up so that you have a steady income stream during your retirement years.
But what exactly does a 401(k) do for you, how does it work, and what is a 401k meaning to you right now?
These are some of the questions this article will attempt to address for you today.
When you finish reading, you’ll have a better understanding of just how important a 401k can be to your retirement plans.
How much is a 401k?
Since 1978, United States government has allowed employees to put aside money for retirement prior to being taxed on it and this tax deferment lasts until the money is drawn out and retirement age. At this present time, you can put in up to $18,000 a year pretax and often your company will put in a proportionate amount as well.
This is a win-win for you as you get to build up your retirement plan and you get assistance from your company. This is often considered a “perk” at many firms today. Many companies use this is a lure to attract qualified people to come work for them.
As of 2006, you are now allowed to contribute to a Roth IRA but this uses monies after-taxation has occurred.
After you have decided how much money, you’re going to take out of each paycheck and invest in your 401k you then must select the best mutual funds for retirement accounts or the best IRA mutual funds that will meet your needs further down the line when you reach the age of retirement.
Many companies offer a selection of mutual funds, corporate stock, and cash funds that that you can purchase using your 401k or Roth IRA in.
Companies hold open enrollment on a regular basis to enable their employees to opt in to the company’s 401k program.
In order to make the selection intelligently you should do a little research into the funds, see what their rate of return has been in the past, and perhaps even get a prospectus (a report detailing how the fund operates and the stocks that the mutual fund invests in).
It’s also a good idea to find out who the fund manager is for the particular mutual fund that you’re thinking of having your IRA or 401k money invested in.
Often it is the fund manager not the fund itself that drives a high rate of return. What you are looking for here is a fund manager with a proven track record in successfully managing and growing the fund.
You may also wish to read up on the fund and see if it is a winner one of the many journals or online websites devoted to mutual funds and 401k investing.
These are some of the things you need to know to find out if your company’s mutual funds selection is the correct one and is a good candidate for your future investment needs.
Rollovers, Gold, Coins, IRAs
You can get a great return on your money and retire comfortably if you have chosen the mutual funds or other investment options properly.
Other questions arise are about rollovers and what are the best 401(k) rollover companies?
Again, you’re going to have to do your homework and identified by the web or journal research what the best rollover methodology and which company you want to go with.
In the media today, there’s a lot of talk about rolling over your 401(k) into gold, precious metals, and coins as a hedge against inflation. http://www.goldira-companies.com/
Normally people don’t roll their 401k until retirement age, they change jobs, or they feel they can get a better rate of return by rolling over into a Roth IRA.
Here is a list of the 2015 best companies to deal with as of right now listed by category:
What are the best 401k rollover companies?
http://www.thinkadvisor.com/2011/09/08/top-firms-for-401k-rollovers-by-ira-investors, the list is a little dated however, it gives you a pretty good idea of the type of firm’s that may help you when it comes time to roll your 401k for your retirement needs and the long haul through your golden years. These are not recommendations but rather a helpful guide.
How Much will I get at retirement?
Another question people ask is how much is my 401k going to be worth at retirement?
The answer to this will depend entirely on your ROI (Return On Investment), the fund manager, the amount of money you are investing into the plan, how much money your company is matching you, and whether or not the stock market is either in a bull or bear cycle.
This means of course you have to watch your 401k investment carefully and be prepared to switch or change the mix of mutual funds, bonds, or other investments that your particular company is offering to get the maximum value at your retirement age.
What are the Best Mutual Fund websites?
The best fund websites often change without warning and as of last year here is a current stack ranking of some of the best:
But during a bear market, you have to take into account the fact that even the best mutual fund will take a beating if there’s a market downturn.
Over the past 20, 30 years, or so a Fidelity 401k has proven to be immune to most of the fluctuations in the markets, this is been shown previously in this article but here it is again:http://www.thinkadvisor.com/2011/09/08/top-firms-for-401k-rollovers-by-ira-investors.
So once again, no matter what the web is recommending you have to use your own judgment and do your homework in selecting the right mutual funds or investment options to fuel your retirement’s future.
The 401k is still one of the best ways to do that and make sure you can provide for you and your family’s retirement needs.