Fortune Magazine is looking at 10 Rules for Building Wealth, and here is the second item on the list: Use your 401(k).
If you have access to a 401(k) or 403(b) at your job, particularly if the plan offers employer match, then it makes sense to invest in the plan. The employer match is basically free money, even if the investment options aren’t spectacular. If there is no match offered, you should probably weigh your other tax-advantaged investment options, like a traditional or Roth IRA, against the 401(k) choices.
Fortune has an additional thought:
New pension legislation is encouraging companies to offer third-party investment advisory services, so call HR to find out if yours offers any on-the-house guidance.
If you are self-employed through a corporation or a sole proprietorship, the Solo 401(k) is another option, but once again, weight investment options and take fees into account. Unless I quit my day job, I won’t have an opportunity to test the waters with a Solo 401(k).
Published or updated December 12, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.