Maximize 401(k) Matching

I'm about to tell you about the best investment you'll ever make. It's not futures or options. It isn't stock, real estate or precious metals. It is something almost everyone has access to and is the ultimate "no brainer" investment.

YOUR 401K!! More specifically, if you employer offers matching on your 401k contributions - you can't lose!

Don't believe me? Let me explain why.

When an empoyer offers 401k matching, they are guaranteeing that they will match a certain percentage of your contributions. A common match is 50 cents on the dollar. That means if you put one dollar into your 401k plan, they will match your contribution by putting 50 cents in. You just made 50% on your investment!

Now you see why it is important to maximize your contributions. Perhaps one of the biggest mistakes investors make is to pull back on their 401k contributions because the market or their portfolio is doing poorly. However, every time the investor puts money into their 401k, they are making a guaranteed profit up front. Besides, when the market goes down, most investors benefit (see " Down Markets Good for Many Investors").

I must disclose a one important detail about this wonderful investment: Some companies have vesting schedules for employer contributions. This means you may have to work a certain amount of time to keep the money the company contributes (An example would be after 1 year, you get 25%, after 2 you get 50% and so on). The good news is that you always get to keep your contributions.

My recommendation: maximize your contributions to the point where you receive all the company matching. For example, an employer might match $0.50 on the dollar up to 8%. My recommendation is that you at least contribute 8% to take adantage of the extra 4% of your salary the company is willing to chip in. If you have the option to contribute beyond the 8% without matching, it may make sense depending on your financial situation, but my main point is that you need to at least get up to the 8%.