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How to Get the Most Out of Your 401K
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Why should you lean more heavily on the stock funds?
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How to Get the Most Out of Your 401K
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Hi, my name is Jon and I'm an independent investor from Kansas City and I'm going to share with you how to get the most out of your 401K on About.com.

Contributing to Your 401K

The first step on how to get the most out of your 401K is to actually contribute to it. Most Employers offer a 401k but you will have to go to your human resources department and fill out the forms.

Start contributing more from your paycheck since it comes out before you pay taxes on it. Also, take full advantage of your employer match. If your employer matches up to three percent of your contribution then at least contribute three percent of your paycheck to get that additional three percent from your employer. This is like getting free money, which over time will really add up.

Diversify Your Portfolio

Have a well diversified portfolio in your 401k between money market funds, bonds and stock mutual funds. But lean more heavily on the stock funds as over the long term they tend to outperform the others.

Pick from a variety of different mutual funds to take advantage of the the different growth levels and all the different markets from large cap, mid-cap, small cap. To international mutual funds. That way you can manage risk but also take advantage of growth periods that happen in those different funds. Also, be aware of the penalty for early withdrawal, or if you plan on taking out a loan against your 401K. If you end up having trouble repaying this loan you will end up owing income taxes and a 10% early withdrawal penalty. I wouldn't do this unless you are pretty certain you can pay it back.

Thanks for watching and for more information on stocks and investing be sure to check us out on the web at money.about.com.
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