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Marino on Money: May 6

READ MORE: Marino on Money: May 6
In this economy, investing your money may seem tough, but it's not impossible. Today, financial planner Ross Marino discusses the importance of 401(k) plans. Today let’s talk about investing $500 with little risk. Is there another way to receive an instantaneous, guaranteed increase in your money, other than paying off debt? That’s a good question. There’s only one other way I know of that comes close. It’s taking advantage of a match in your 401(k). If your employer offers such a match, you defer money into your 401(k) and eventually your employer puts in a match. Sometimes the match is immediate. If your employer offers 50 cents on the dollar, that means you receive a return of 50% on any deferrals that are matched. If your company matches up to 6% of your pay, then you could receive a match equal to 3% of you pay. That a 50% increase in your money. If your match is dollar for dollar, it represents a 100% increase in your money. If the match is immediate, then it is an instantaneous increase as well. As soon as the money is in your 401(k) account, it is guaranteed. Meaning, it’s your money, not the employers. Keep in mind, the investment options within your 401(k) carry difference levels of risk. I am just talking about the employer match, not the investment options. Does a 50% or 100% increase on a portion of your money sound good? Here’s another way to look at it. In today’s economy, most people are happy just to have a job or own a business. But how would you like a raise? If you company offers a 3% match, it’s like getting a 3% raise that is deposited directly into your retirement account. I am constantly amazed at how many people have the opportunity and can afford to invest in their company-matched 401(k) plan, but decline to participate. A match is free money. Which means…FREE MONEY. You don’t need to work harder. In some cases, the match is all yours, even if you leave the company right after you receive it. In other plans, you receive the match over the course of a few years. That is called vesting. But whatever you call it, it’s free. Your employer has decided to offer you a match, and based on my experience, they really want you to take advantage of it. I speak regularly with employers who offer 401(k) plans, and they really want their employees to save for retirement. Offering a match is one way they try to help you do this. Of course, if you don’t bother to save money for retirement, you can always count of Social Security. Right?

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