Monday, September 16, 2013
ADVICE FOR NEW EMPLOYEES
Here is some good advice for college grads who are starting their first job -
· If your employer offers a 401(k) plan contribute as much as you can afford to the plan – preferably at least the maximum that will be “matched” with employer contributions if this is done - and consider splitting your contributions between a “traditional” plan and a ROTH 401(k) if a ROTH option is offered by your employer; and
· If your employer does not have a 401(k) plan, or if you cannot yet participate in the plan yet – or even if you can - contribute as much as you can afford to a ROTH IRA account. If you want to be safe, invest in an “index” mutual fund.
Tax-free compounding is a great thing. Here, from “Getting an Early Start on Saving for Retirement” at 360 FINANCIAL LITERACY, is a chart that illustrates the power of tax-free compounding and hits home the benefit of starting to save for retirement early -