is key to success when it comes to investing money. As your company was smart enough to offer the management of mutual funds in your 401(k), doesn't mean you should pump in all your money into one fund. Many listed and openly traded companies offer their own stock in the 401(k) plan. Enron and many other big companies that went out of business have proved that investing in your company stock can be dangerous. To avoid a huge loss diversify the investments. Investment of funds should not be limited to only one sector, diversify it across all sectors and invest in blue chip companies to get more returns.
Leave the Money Alone
Do not take out the 401k funds until it is really necessary and is a matter of life and death, and no other source of money is available at that time. Other than the problem of not saving money for retirement, penalties to the extent of 20% of the funds is levied on withdrawal of 401k funds. There is also a 10% penalty to be paid, plus state income taxes. To avoid the penalties and double taxation wait till you're aged 59 1/2. Moreover, a long-term investment gives more returns than a short-term investment. By following these few tips, you'll have a healthier 401k for your retirement, whether you've started saving at 25 or at 40.
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