Stock Investing Basics: Making the Best of Your 401(k) & IRA
Two of the most common investment accounts for retirement are the 401(K) and the IRA. Knowing which account to use in various investment situations can be tricky. Here are some simple investment account tips that might point you in the right direction to maximize your returns and minimize your future tax burden. There are several main advantages in contributing to a 401(K). 1. You can deposit a lot of money each year compared to other plans. 2. Your employer can match funds that you deposit up to a set maximum. 3. Nobody can touch the money, even if you go bankrupt. 4. Most employers allow you to borrow your own money, paying back the loan over time. and 5. Contributions come investment choices that you have. You are typically limited to a few mutual funds and bonds. 2. The average 401(K) fees are 1.5 percent off the top every year. This small amount ends up reducing your potential gains by 40 ? 60 percent over time. So how do we maximize our profitability in our 401(K) accounts? If your employer is matching your contributions, then it stands to reason that you should contribute money to your plan up to the set maximum for matching funds. It also stands to reason to choose either a low-cost Index Fund that mirrors a broad index like the S & P 500 and to get some bond exposure. Avoid actively managed mutual funds, since the management fees will ?
www.moneyweek.com The PEG ratio, Tim Bennett, Deputy Editor at MoneyWeek, explains what it is and how to use it as an investor. For more investment news and advice visit http Feel investment videos from Tim.
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