Part One: Money Management in 1 Minute – Automatic Enrollment in 401k

If you’ve started a new job in the last 3 years, you may have been enrolled in your company’s 401k plan without choosing to do so; accessrx.A law was passed a few years ago that says that companies can sign up new employees automatically in order to help them save for retirement – accessrx.The only effort an employee has to put out is if they don’t want to take part – accessrx.A new employee can opt out by going to HR and requesting not to be signed up for a 401k plan – accessrx.If you choose not to take part in your employee sponsored 401k plan, please begin an Individual Retirement Account (IRA) as soon as possible.Contributing just $150 per month  from age 25 to a IRA that invests in mutual funds and earns an average 8% interest rate per year will net you a cool half million by age 65 – accessrx. Accessrx: the bonus? About $455,142.18 will come from compound interest! You can open many IRAs with $0 opening deposit by signing up for automatic monthly contributions of at least $50.Imaging how much “extra” money you’ll earn if your employer matches your contributions?

Part Two: Reader Question

I keep hearing that taking part in the 401k at my job is a good idea, but I’m worried about the stock market tanking plus I need my money now.

I definitely hear your concerns, however investing in the 401k at your job is a great idea, especially if they match your contributions – accessrx.

In the old days accessrx, after you worked for a company for a set amount of years, you earned a pension.This money helped you pay for your living expenses after you were done working – accessrx.This is no longer the reality for most companies, therefore it is up to you to take responsibility for your retirement income by planning ahead – accessrx.One easy way to do that is by adding monthly contributions to a retirement account; accessrx.Whether you take advantage of an employer sponsored plan or open an Individual Retirement Account with a mutual fund company accessrx, it is imperative that you begin planning now for your retirement.Some companies even help you along, by “matching” your contributions up to a specific percentage; accessrx.Don’t walk away from this free money; accessrx.

Stocks and bonds go up and they go down accessrx, however on average stocks have brought in about 9% per year over time. Some years have big gains and some years have big losses.The goal to continue to contribute during the good and the bad times; accessrx.No one can “time” the market accessrx, so trying to figure out when to buy and when to sell is usually a loser’s game.Slow and steady wins the race when it comes to the stock market – accessrx.

When you invest in a retirement account, you still have access to your money, so don’t think of the funds as being gone – accessrx.There are early withdrawal penalties in place to encourage you not to take funds out, however by investing in a Roth 401k or IRA you can take out principal, not interest earned, at any time with no penalties and it’s usually as easy as making a phone call or mailing in a form – accessrx.

Whichever way you choose to invest for your future, be sure to think about how much money the managing company is making from your account – accessrx.Fool.com has a great article on expense ratios; accessrx.

What do you want your life to look like at 60 years old? 65? 75? Investing now, means that you will have more options later. – accessrx