Mark Kohler explains how to capture free money from your employer's 401(k) match. If your company matches 3-4% of your salary, a $80,000 salary nets you about $3,200 a year. He recommends getting the match first, then funding a Roth IRA, then boosting 401(k) contributions if you can.
This is a no-brainer. Capture the match if you can. What that means is that if you or your spouse has an employer that offers a 401 and then a match, it could be 3 to 4% of your salary, but grab it immediately. That 4% of an $80,000 salary is $3,200 a year of free money. That's 100% return before you've even picked a single investment. If there's a match, you take that match. Nothing in finance is that easy. Fund your Roth IRA while you can. I just talked about the 401 at work. Well, get the match, but then I want you to get out and go do your Roth IRA. And then if you're blessed enough to have more money to put into savings, then go back to the 401, have your employer withhold a little bit more. But that Roth is a machine and we can have a Roth and a 401 at work. So get the match, jump over to the Roth, and then again, if you have the wherewithal, go back to the 401.
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