Prepare Your Plan For Retirement
By Wade Robins
There is much more to retirement than just relaxing in an armchair or taking morning walks. A prerequisite for a comfortable retired life is detailed planning, whether your retirement is ten years away or years away. You need to set vision to make investments and swiftly work towards achieving them. A retirement planning helps you pursue your interests post retirement. A 401(k) is a type of retirement plan that allows employees to save and invest for their own retirement. 401k investments can be a loosing scheme if the investments are not made properly. To beat this, here are few instructions, which will help you get more returns.
Save Early and Save Plenty
A 401k investment can be a big basis of income post retirement and hence is very important to plan for the same. A systematic and habitual investment made through 401k plans is very noteworthy irrespective of the growth rate. To be certain that you earn more money start when you are young and you will not miss out the opportunity to pursue your interests. Make it a habit to put a definite amount of cash into your 401k each month.
Make Sure You Get Matching Funds
You should be sure that you're saving at least the same amount as your employer is contributing towards 401k-retirement plan. The reason being that the employer contribution can be considered to be free money as you're going to get it. The ideal situation, to have more returns is to be 100% sure that you are matching with your company's contributions or investing more than what the company is willing to contribute towards 401k. For more info see http://www.1retirementplan.com/Nationwide_Retirement/ on Nationwide Retirement
Research and previous experiences has thought to us that diversification is key to success when it comes to investing money. As your company was smart enough to offer the management of mutual funds in your 401(k), doesn't mean you should pump in all your retirement money into one fund. Many listed and openly traded companies offer their own stock in the 401(k) plan. Enron and many other big companies that went out of business have proved that investing in your company stock can be dangerous. To avoid a huge loss diversify the investments. Investment of funds should not be limited to only one sector, diversify it across all sectors and invest in blue chip companies to get more returns.
Leave the Money Alone
Do not take out the 401k funds until it is really necessary and is a matter of life and death, and no other source of money is available at that time. Other than the problem of not saving money for retirement, penalties to the extent of 20% of the funds is levied on withdrawal of 401k funds. There is also a 10% penalty to be paid, plus state income taxes. To avoid the penalties and double taxation wait till you're aged 59 1/2. Moreover, a long-term investment gives more returns than a short-term investment. By following these few tips, you'll have a healthier 401k for your retirement, whether you've started saving at 25 or at 40.
About the Author: You can also find more info on Retirement Plan and Active Retirement Living. 1retirementplan.com is a comprehensive resource to know about Retirement.