401(k)s are incredible tools for building future wealth. They have a lot going for them: tax advantaged accounts with tax-free (Roth) or tax-deferred options, well-diversified investments through mutual funds, and high total contribution limits.
But truly one of the most admirable benefits of a 401(k)--which many companies offer through their 401(k) plans--is the company match.
“Cash is king,” the popular saying goes. Of course, some also say that holding cash--rather than investing it--is money wasted. Which is it? Recent research suggests that we’re probably asking the wrong question.
When considering what cash really does for us, the research points to a greater value which may not be as obvious: Having a greater amount of cash savings actually increases one’s overall life satisfaction and financial well-being in a really big way.
In the past I’ve talked about the importance of rebalancing and changing your asset allocation as you approach retirement. Making these tiny but crucial “course corrections” is a very important step in the retirement saving process, but it can take time and be a bit complicated, depending on how many investments you have to work with.
Wouldn’t it be nice if there was a service that would change your 401(k) asset allocation for you--automatically?
I can’t see into your financial future. No financial advisor can, and you should run far away (far, FAR away) from any who believe they can. All I can say is I believe individuals, families, and communities have an inherent desire to grow and prosper. And most leaders of nations (including our own) want the same for their citizens.
Pitting retirement accounts against each other is not quite as thrilling a comparison as others, but the exercise is important as young families make plans for building future wealth.
Two of the most popular retirement accounts--401(k)s and Roth IRAs--are nearly identical in purpose but worlds apart in their composition.
In this post I’ve broken the main characteristics of 401(k)s and Roth IRAs into four categories. It’s impossible to make a true “apples to apples” comparison of these retirement accounts, but I hope this can get you a little bit closer and help your family make smarter decisions around your retirement.