Why we all should invest in our Companies 401(k) and other benefits.
Know what your company match is – it is FREE money!
It is very important to know what your company match is because you need to be taking advantage of it. Many people I have talked to do not do this because they “cannot afford it.” If you start small and grow it each time you have a raise or when you feel really good about your money situation you will be golden! My company match used to be if you contribute 5% and they would match 100% of the first 3% and 50% of the other 2%. Recently it changed and it is very rich match – Contribute 5% and they match 100% of the full 5%. This is 5% of the company adding to your salary in reality! Can you say… THANK YOU!
Are you willing to give up $150,000 of free money? Work at a company for 5 years, and give up $16,000 of free money?
Each company is different on the company match, so research yours.
See the chart below of a great visual for someone who has a salary of 50,000, invests 5% into their 401k, receives full 5% company match, with an average 10% rate of return.
|Years||Salary||You Invest||Company Match||Total with 10% rate of return||Without |
Magic of Compound Interest
July 2015 – July 2016 I was busy paying off the last of my student loans to become debt free and did not contribute much to my Company’s 401k. (If I could go back, I would have at least done a little bit like 3%). In 2017, I started back up heavily, 6%, because I started reading books and articles about the magic of compound interest. I did an experiment with my own investment and want to share with you! In 3 years, look at the compound growth.
My hubby is a great example of this…
When we first met he was not investing into the 401(k), I get you – you are thinking and you married this man?? YES – he challenges me in other areas where I am not strong.
Anyways… I talked about it a little bit to him but knew I could not push it onto this decision. His coworker and my hubby then started talking about it one day at work, and they both started investing into their 401(k) together!
Now, my husband is investing more into his 401(k) and ROTH than I am and it is because a friend talked to him about it.
Do not be scared to talk to someone about investing in their future. They may need you to give them a little boost.
Another good piece of investment with your company is the Health Savings Account (HSA). This is where you can place money into a fund where it is tax free now and you can use for medical expenses in the future. My company I work at allows you to keep $1,000 in the regular fund and then you can invest the rest! You know what I do, I invest the rest because why would I risk letting my money sit their doing nothing?
I had an executive who was my boss tell me the greatest advice and I want to share it with you all. He told me, do not spend the money you place into your HSA. You may think you “need it now”, but wait until you are older. You need more medicine, you need more doctor visits, and you can even use it to pay for your Medicare and Medicaid! To this day, I have listened to him and invest it for my future.