It may be a good idea to check your 401(k) occasionally. They best employee payroll software makes this easy. Someone's 401(k) benefits usually work by passively investing in different asset classes without your direct input. A portion of your money goes into each of the investments, and you don't have to think about it. The problem with this is there are points when your investing strategy might change, but if you don't update your 401(k) then your investments will never become anything different, which may cause you to gain less money than if you made periodic alterations to boost your returns, NASDAQ reported.
The best times to change your retirement fund are whenever something important happens, such as getting married or receiving a promotion. NASDAQ also recommended that you update at least once a year.
Consider an IRA
The Motley Fool also brings up the topic of the IRA. In terms of tax incentives, having both means that if your income is above $70,000 then you lose the deduction benefits of an IRA. Otherwise, anyone under the age of 70 1/2 can invest in an IRA. IRAs have a basic contribution limit of $5,500, while 401(k)s allow you to invest $17,500 of your money into them.
Employers generally match 401(k)s with money of their own, while IRAs only take money from investors and put it away. IRAs are cheaper in invest in, since there is generally little to nothing in the way of annual fees, although the return may not be as good. Additionally, IRAs give you many more investment options than a 401(k), which has a few investment plans you must choose from.
Early next year, the maximum that someone can invest in a 401(k) will increase to $18,000, according to a separate Motley Fool story. Those who can afford to invest the whole amount will see a benefit to their returns assuming their employers do matching. This is the major reason why it would be a good idea to look at your 401(k). Another reason might be to switch from riskier investments early in a career to low risk investments later down the road when someone has more money to lose if things go south. An additional issue is how your company matches someone's money. If it gives that person stock, then it may be a good idea to put some of that money somewhere else if the company's longevity is in question.
The bottom line is that while a 401(k) is always a great way to make money, it will make you even more money if you pay attention to it at least once a year.