4 Tips to Manage Your 401(k) More Smartly

Editors' pick: Originally published Aug. 5.

Having a 401(k) in my younger years taught me some valuable lessons. Some of them good and some of them very bad, but that later led me to incredible opportunities. There is definitely a right and wrong way to handle your 401(k), and leaning heavily on your HR department is not one of them.

In 2008 I lost 38% of my 401(k) to the Great Recession. To say it put a bad taste in my mouth would be an understatement. But as with all falls or failures in life, you can choose to learn a lesson and make the loss a paid for educational opportunity. If you've decided to participate in your company-sponsored 401(k) you'll want to know these four tips for managing your 401(k) funds for the best results.

  1. Save while you are young

The sooner you can start putting money away the better. My clients that want to help their children save money are always shocked at how much their child can accumulate by retirement age simply by letting money compound and grow for 40 to 50 years.

You will never be unhappy with saved money, only with unsaved money or not enough saved money. Starting young gives your money time to grow. Only about half of employers in the U.S. now offer a 401(k) program. This is down from over 60% in 1999. Several major market corrections have hurt companies to the point that they can't afford to offer a plan or their employees simply don't use it. As of 2015, 68% of employees with access to a 401(k) opted not to enroll and participate.

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