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Best strategy to maximize 401K for a company that gives a matching
I remember back when I took a business Finance class in the college where my professor showed a film about terrible episodes that happened to employees with pension plan when the companies went bankrupt or bad. The screen showed so many people crying with tears or ones with anger as their pensions went kaput. Pension plan is a system where the employees are eligible to receive a large chunk of money when they retire based on their seniority service for their employers. However, the companies could somehow deny to pay the pension to employees, which then put their employees’ retirement in jeopardy. Many companies decided to ditch the pension plan and instead adopt 401K plan which is essentially a collection of mutual funds and other investment packages that invest money based on employee’s contributions through retirement broker like Fidelity or BlackRock.
It became a common financial sense that it would be a stupid decision for employees not to contribute to 401K. In fact, almost every financial advise source I heard highly recommends this as a default option. The majority of the recommendation is based around the idea that investing in 401K is one way to invest without much tax consequences. Other reason why many people recommend 401K is because that the value of cash gradually depreciate over time while the investment gradually…
