5 Great Reasons To Invest In A 401k
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 that employee can use to save a portion of their paycheck and have it grow tax free until retirement comes around. This plan has helped out many people since it was created for these simple reasons.
1. Tax Free
The best part about the plan is that it comes with a tax free rate of return. You do have to eventually pay taxes on it when you take the money out, but as long as it is in the account your money can enjoy a tax free growth which can add up over time.
2. Employers May Add Money
Sone employers will actually give you some sort of insensitive for saving up for retirement, for instance many will actually add more money into your retirement for every one dollar you add. 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 tends to be about 10% that beats many of the other forms of investing that are out there. 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 make a nice safety net because the money inside it is normally managed with caution. So if you have a 401k it will allow you to always have some money around just in case you find yourself in an emergency situation and you simply need to use it.
5. Hardship Withdrawals
There are many 401k hardship withdrawals which will let you take money out during certain emergencies. 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.