On The Move

Your future's coming up fast. Make the right investments and prepare for the journey ahead.


Introduction to 401ks, Roth IRAs, and Investments


You’re young and just trying to keep up with all the real world has thrown at you, but it is still important to start thinking about retirement—however far in the future it may seem. If you have not started contributing to a 401(k) or an IRA or a Roth IRA  and have no investments, it’s time to start. Investments push your money to its full potential, allowing you to have more money in the future, and with any luck, retire sooner!

401(k) plans can be an alternative to traditional pension plans. Considering many people change jobs a few times throughout their career, 401(k)s are very beneficial because workers can take their retirement savings with them instead of losing their pension plans. Look at your funds to see how much money you can put in your 401(k) and frequently evaluate your budget to see if you can start contributing more. Many people do not contribute enough to their plans, when it’s easy and important to do so. Often 401(k)s are tax deductible and companies can match them. The plan also offers approximately 12 investment opportunities to get involved with. With so many reasons to contribute to a 401(k) plan, it’s hard to turn it down. Calculate your 401(k) to decide how you should plan your savings.

An Individual Retirement Account (IRA) lets you save and invest your money each year, tax free until you withdraw it when you retire. There is a maximum amount that you can put away (you can put at least 3 times as much in a 401(k) plan), but an IRA account allows you to invest in many more mutual funds than a 401(k). If you decide to invest in a Roth IRA, you can make nondeductible contributions to an account, where the earnings are tax-free and penalty-free if the account is open for five years and you:

  • Are at least 59 ½ years of age.
  • Are purchasing your first home.
  • Become permanently disabled.

Check to see if you qualify and learn more about IRA and 401(k) plans.
When it comes to other investments, you have many options. There are three main types of mutual funds to choose from:

  • Money Market funds
  • Bond funds
  • Stock funds

 

Money market funds have low risks and have generally short term interest rates. They have inflation risks, but are usually successful for a short term.

Bond funds have higher risks than money market funds, usually because you can earn more money with them.

Stock funds are very popular and usually make the most money, but profit can rise and fall quickly and dramatically.

Whatever type of investment you decide to make, it is important to at least make one. Make an informed decision about what to invest in and watch your account accumulate more value. Whatever you do, don’t let your money just sit there-do something with it!  It will pay off in the end.