401(k) is a retirement account sponsored by an employer. It lets you save and invest a percentage of your paycheck before taxes are taken out. Taxes aren’t paid until the money is withdrawn from the account. 401(k) statement is the one financial statement you should almost never look at. Ben Walsh writes on Huffington Post that “once you understand the basics of your 401(k) and set it up, the only decisions left to make are ones that will hurt you in the long run. Instead, the best thing to do with your 401(k) is set it and forget it.” The recommended investment vehicles are index funds or target date funds. With an index fund, you will capture the total return while the cost is super low. The less you pay in fees, the more you keep in your investment—it’s that simple. “Once you’ve set up your super boring investments, you’re done. Maybe look at your 401(k) around tax time to remind yourself that you made a good decision,” said Walsh. (huffingtonpost.com)
