Sat Nov 23 2024, by Tyler Gardner

Why Investing in a 401k is a Smart Choice for Your Financial Future

If you have ever been told that investing in a 401k is a dumb idea, you might want to know these three things. I'm Tyler, a former financial advisor and portfolio manager, and now I make financial content for free so that you don't have to pay for it.

1. The Power of Compounding

If you make $75,000 a year and you put 5% of each paycheck into a 401k, investing it in low-cost index funds, you will most likely have about $1.12 million in 30 years. Not bad.

2. The Impact of Company Matching

If you were to put that same 5% into a 401k and get a 5% company match, you would most likely have closer to $2.24 million waiting for you in 30 years. That's pretty dang good.

3. Understanding the Myths

So why have you been told that investing in 401ks is a scam? Financial advisors have told you that 401ks are bad because they can't manage your 401ks and take 1% of your assets under management, but they can if you roll over to a traditional IRA. Similarly, insurance agents have claimed that 401ks are a scam because they can't make 70% to 80% commissions off of your 401k, but they can if you use some of that money to buy a whole life policy or an annuity.

4. Make the Smart Choice

If you have access to a company match, and even if you don't, putting 5% to 10% of every one of your paychecks into a 401k is one of the best financial decisions you will ever make. It forces you to save, it forces you to invest, and it allows you to have a future free from financial worry.

If any of this is helpful, like and follow, and I'll keep trying to get you one step closer to where you need to be.

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