Reasons To Invest In A 401k Plan
A 401k is a great way to save up some money for your retirement. In fact here are five reasons to invest in these plans.
But before we get into those reasons not everyone is aware of what this plan is, so lets answer the question, what is a 401k plan? This is simply a retirement plan where employees can save a portion of their income and have it grow tax free until retirement. This plan has helped out a lot of people because it does come with a few great benefits.
1. Tax Free
The biggest benefit is that it allows tax free growth. That does not mean you never have to pay taxes on it, you will once you take the money out, but while it is in the account you can enjoy a tax free growth.
2. Employers May Add Money
A lot of employers will give you some sort of insensitive for saving up for retirement for instance they may depsit some more money into your account for every $1 you invest into it. If your employer matches you 1 for 1 and you invest $500 into your account your employer would deposit another $500, it is free money.
3. Average Stock Market Return
The average stock market return is around 10% that already beats many other forms of investing. Combining this with the free money you could receive and the tax free growth it has a good potential.
4. Managed Safely
A 401k can bwe used as a safety net because the money inside it is ususally managed as safely as possible. So if you have a 401k you know you will always have some money there just in case you ever wind up in an emergency situation where you need it.
5. Hardship Withdrawals
There are a lot of hardship rules that can let you take some money out during certain emergency situations. You can also use the 401k hardship rules to get into a first home or even pay off some college loans without getting hit by the normal 10% penalty that comes with an early 401k withdrawal.
Tags: Reasons To Invest In A 401k Plan, why invest in a 401k
This entry was posted on Wednesday, November 18th, 2009 at 4:37 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.