401k Matching

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The holiday season brings time with family and friends and all sorts of conversation. As someone in the financial service industry, I’m often asked for financial and investment advice.

The most common question I hear these days is, “What should I do with my cash?”

After verifying that the questioner is covering their expenses, has sufficient insurance coverage, and some emergency plan or cash, my next question is often, “Are you contributing to your 401k?” I’m often surprised to hear that my friends and family are not contributing at all.

At a minimum, most people would be well-served to at least contribute up to their company’s match. Many companies will match their employee’s contributions dollar-for-dollar, up to some specified level. Thus, many people can effectively get an x% raise on their salary OR a 100% return on a portion of their savings, depending how you look at it. There’s virtually no investment in the world with this type of risk/reward profile, so there’s very little for me to recommend if someone’s not doing this at a minimum.