So as I was saying the much hyped and beloved of almost all the experts has its advantages. It sits in the account entrusted to a company tax free until you take the money out at retirement (age 59 ½ year I believe). You can expect to receive a matching fund from your company (if they have that policy), and you don’t have to worry about checking your investments since it is done by the company managing your 401K. The only thing that you do is to allocate your money among stocks, bonds etc. I just call this lazy man’s investment. I call this because you just allocate some percentage of your money and just let other people handle it.
Well in order for you take care of your own money; you have to actively manage it, meaning doing some research on which company is doing how and so on. I guess it does not take that much time if you put your mind and effort into it. But I guess we (meaning the investors) are so busy or just plain on lazy (no offense) that they just let other people do their work.
I call 401K. Although it may be perfect for millions of Americans but for me I do not find it attractive (except for the matching funds (call it free money) at the end of the year. It is forced savings and if someone can be a little more disciplined in their financial matters, they can earn far more income on their investments then they can with investing in 401K. I have several friends who have lost a lot of money in 401K but lack of a better alternative or just plain old laziness (I dare say), they keep putting in more money into it.
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