One of the most important decisions you have to make in your 401(k) plan is asset allocation — that is, how much you put in stocks, bonds, and cash. Asset allocation is the strategy of dividing your investments across various asset classes in order to reduce risk through diversification. Here are two simple approaches to get you started.
Your 401(k): Benefits of Starting Early
Your 401(k) could make you a millionaire. By making small, regular investments starting in your 20s or early 30s, your savings will grow tax-free for 30 to 40 years. Unfortunately, people tend to procrastinate because they are focused on bills that are due today and the things they want right now. We human beings are notoriously bad at wrapping our minds around far off events.
When it comes to investing, time is a big advantage. Here are three reasons why.