May 27, 2020Smart Tips for Investing in Your 401(k)

How can you make the most out of your 401(k)? Take a look at some ways to maximize this important investment: 

  • Meet regularly with your financial advisor. The best strategy you can take to maximize any investment is to get professional assistance. A financial advisor will discuss growth strategies with you and encourage you to make smart choices with your 401(k). Furthermore, they can help you with any other current or potential investments you may have. Most advisors suggest meeting with them semi-annually or annually to review your entire investment portfolio.

  • Be sure you understand the rules and contribute to the limits if you can. 401(k) investment limits are variable depending on your age. With that said, it’s important that you know and understand what the rules are for your specific age group. By contributing to the maximum dollar limit allowed for your age (with pre-tax dollars), you’ll also be able to lower your taxable income. Not only will this maximize your growth with a larger investment, but you’ll net some short-term tax savings as well.

  • Focus on employer matching. Be sure you contribute as much as you need to maximize your employer matching contribution. For example, if your contribution limit is $5,500 for the year, and your employer will match up to $2,500, be sure that at a minimum you contribute $2,500; this will ensure you’re “given” an extra $2,500 from your employer.

  • Make sure your fund is balanced. Over the years, regardless of your age, your 401(k) will change in character. For example, assume your 401(k) is originally invested in 60% stocks, 30% corporate bonds, and 10% government bonds. After four years of growth, the characterization may have changed to say 75% stocks, 20 % corporate bonds, and 5% government bonds due to the uneven growth rates of each type of investment. To balance your 401(k), you’ll need to take some of that stock growth and filter it into other areas. Discuss these issues with your financial advisor to make sure you are maximizing your investment to reach your financial goals. 

Make your 401(k) the best investment it can be. 


Each individual’s financial situation is unique, and readers are encouraged to contact PEFCU when seeking financial advice on the products and services discussed. This article is for educational purposes only; It does not constitute legal advice. If such advice or a legal opinion is required, please consult with competent local counsel. 


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