Most companies that offer 401K plans to their employees also offer some kind of company matching. They may give you a dollar for dollar match, a 50 cents on the dollar match, or similar up to a certain percentage.
Whatever amount you contribute to you 401K, you should contribute at least enough to get the full company match. This match is basically free money that can add significantly to your portfolio gains. Imagine you put $1000 into your 401K and your company matched 50%. The match could make up for otherwise poor performance. Even if your portfolio didn’t appreciate over the course of a year, on your investment of $1000, your account would be worth $1500 thanks to the match, which amounts to a sizable 50% gain.
If the portfolio did appreciate, the gain would be even larger. The extra funds from your company match will continue to grow as the interest compounds between now and when you make withdrawals at retirement. There may be no such thing as a free lunch, but company matching is about as close as you can get.
If you enjoyed this post, subscribe to my feed via RSS or email.
You can support Richer by the Day by visiting our advertisers and sponsors. A thumbs up from any StumbleUpon users would also be greatly appreciated.
Related Posts
Getting the Maximum Out of Your Company’s 401K Match (Updated)Retirement Investment Priority
2008 IRS 401K Contribution Limit
Invest in More than Retirement
Using Limit Orders
