If you are doing service, you must have a retirement saving plan sponsored by your employer. It is called 401k and it allows you to save a part of your salary that you can use after your retirement. However, given the rate of inflation and the lifestyle you are desirous of maintaining, it is prudent to reinvest the funds parked in your 401k to earn attractive returns. You cannot allow 401k funds to remain parked idle like a piggy bank anymore. If you have no clue as to where to invest, this article presents some good investing ideas for 2015.
Keep investing in your 401k
With economy of the country not doing too well, it is prudent to stick to your 401k. The day of your retirement will come sooner than you expect, and you will have to make do with your retirement fun instead of a regular source of income. Investing money in your 401k is the right step towards building wealth meant for your retirement. Increase your contributions to 401k if possible.
Do not be allured by the markets
It is easy to feel attracted towards stock markets, particularly when they are seen as giving smart returns on investment. If you have surplus money, you can certainly invest in some reliable stocks but always keep in mind your risk taking ability. You need to find the right balance between risk and the worry and sleepless nights that come along with your investment in the stock markets.
Balance your investments
Even if you feel compelled to invest funds in your 401k in the stock market, do spread your risk by investing a large part of this money in mutual funds. Mutual funds are not risky like stock market though they give a lower rate of return. Do not let your investment in stocks go past your investment in mutual funds.
Withdrawal from 401k invites penalties
Your money parked in your 401k is meant to be used after your retirement. It is easy to tap the money in your 401k in times of financial emergencies but 401k withdrawal before maturity costs you dearly in terms of taxes and penalties. This can hurt you both in the short as well as long term. Withdraw money from your 401k only as a last resort if you are unable to meet sudden expenses.
Pay off high interest loans with your funds in 401k
Though tapping funds in your 401k is not advisable, you are better off paying your high interest debts that you have incurred through your credit cards. Get rid of your outstanding balances in credit cards to get out of the financial mess that you find yourself in.
If you stick to these time tested tips, you can expect a lot of wealth to help you maintain the lifestyle you are used to, even after your retirement.