401(k) Matching Game
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What the cards stand for...
Your employer may offer a company match, which means your company makes a contribution to your plan whenever you do. This is a huge bonus as your company is saving money WITH you, FOR you.
Wouldn't it be great if we had a magic ball that could tell us exactly when to buy and sell investments so we could always buy low and sell high. However, experts agree that timing the market is an impossible long-term task and chasing the market is not the way to go. Investing in your 401(k) provides the advantage of Dollar Cost Averaging, which enables you, the investor, to purchase shares at the long-term average price, which reduces the uncertainty of short-term market volatility.
PSCA's Retirement Calculator is designed to provide you with a quick snapshot of your retirement savings situation. It is used to assist in the calculation of retirement accumulation needs. It should be used solely as an educational tool and is not intended to provide financial, legal or investment advice.
Rebalancing is restoring your asset allocation to your original diversification plan. Short-term changes in the value of your investments will result in your assets readjusting to the market. Rebalancing allows you to move your money around so that the percentage returns to your original long term investment allocation.
The benefits of long-term saving and investing can only be attained if you stick with a long-term plan. If you are constantly changing your mind about your asset allocation and your contribution rate, you don't really have a plan. Instead, you have become a short-term investor, subject to volatility risk and uncertainty. Continued participation in your 401(k) plan moves you closer and closer to reaching your 401(k) treasure.
Pre-tax savings - The monies you invest in your 401(k) plan are deducted from your pay before Federal and most state and cities taxes are taken from your pay. These monies are not subject to tax until taken out at retirement. This provide you with more money to save and invest today. For some, savings in your 401(k) plan may reduce your income tax bracket as well.
Investing equal dollar amounts at regular intervals; results in buying more shares when the price is low and fewer shares when the price is high, for an average cost per share lower than the average price per share.
You're in Control. Your 401(k) plan allows you to save the amount that is right for you. Your contribution can be just 1 percent of pay. On the other hand, you could save as much as the full legal limit. Depending on your plan's limits and your age this could be substantial. Finding your 401(k) Treasure is up to you.