Thursday, March 13, 2008

Don't Pass Up Free 401(k) Money

When I first started my current job, I was surprised to find out that my company offers free money to anyone that invests in their own 401(k) retirement account. A lot of companies do this. Some will match up to a certain percent. I signed up as fast as I could. It was like I got an instant raise just for investing some of my own money.

What surprised me more than the free money my company offers, was that many people don't participate in their 401(k) to get the free employer match. If you don't invest the minimum part of your salary to get the matching funds, you are essentially turning down a free raise, and turning down free money. The average company only offers 3 - 5 percent. That is not a lot of your salary to withhold.

Investing in your company 401(k) and receiving your employer's matching funds is an instant 100% return on your money. You instantly double up. It is guaranteed. No risk. I cannot imagine why anyone wouldn't take up that offer. Forget about compounding interest and the benefits of long-term savings. You can instantly double up! With no risk! There is no other investment vehicle that exists that does that.

If your company offers free matching funds on your 401(k), put in maximum that they will match; no excuses. You double up instantly, with no risk. It really is that simple.