On my blog I usually give advance tips for investing,but today I am going to put a little bit more emphasis on the average guy. Like I have plenty of friends that have careers yet they lack room for putting money in the bank. So ,with this tip you can save more and worry less about your future. The 401k is the perfect savings plan for the employee who doesn't know a lot about investing.Why you may ask? Their are numerous reason why but I am only going to focus on the main reasons.
Have you ever heard of the pay yourself first concept? If not , this what is generally when you get paid or receive a payment your supposed to dedicate 10% to your saving plan. Since you may not be a traditional saver ,the 401k is automated meaning it can take up to 20% of your paycheck and puts it in some sort of mutual fund that is tax deductible without you being actively involved. So,all the money that goes in your 401k is tax free.The money you save from taxes alone it worth opening a 401k. Also the 401k is has a mutual fund in it , which can yield an annual average of up to 15%.
So ,your money is growing tax free and income tax free , meaning you are making out with a lot more money than a savings account. Also their are a lot of 401k that offer your company matching ever penny you contribute. Another good thing about it is you can borrow from it usually if you are in a pinch. So if you have 401k please invest all you can in it ,especially if you are not a good saver