People are always looking for ways to have more money. Usually, the best advice is to keep your expenses low, increase your income, and invest the difference. But easier said than done. Saving can be pretty hard with all the unexpected expenses from daily life, and investing definitely isn’t for everyone. However, that doesn’t mean you don’t have a way – a pretty simple one, actually – to double your wealth.
In this article, you’re going to learn how to double your money fast. The solution to taking care of your financial future that you’re going to find out is related to your 401(k). While that might not sound surprising, there is one detail in particular about your pension plan you might be overlooking.
The Hidden Power of Your 401(k)
Usually, you will hear financial gurus telling you not to invest too much in your retirement savings plan. That makes sense. It’s not a smart move to contribute to your 401(k). It’s sponsored by your employer and over the course of decades, it will become the pension that will help you survive the next stage of your life financially. While there are indeed tax advantages to investing in a retirement account, it still means putting your hard-earned money and not being able to touch it in the next 30 or 40 years.
However, there’s another aspect of this that not everyone is aware of. The only time you can not just benefit from investing in your 401(k) but actually use it to double your money is when that includes employer’s matching contribution.
Understanding How Employer Match Works
For a start, check if your company offers to match your contributions or not. There’s also the possibility that the percentage is so small that it’s simply not worth the investment. In which case, it might be smarter to prefer an individual retirement account, which also has tax benefits.
Once that’s checked, it’s time to invest in your traditional 401(k) plan in order to take advantage of your employer’s contribution.
An employer matching program includes the payment your employer makes to your retirement account, the size of which depends on your own contribution each year. If you need professional advice before you invest anything, you can check out Blooom. They offer a free analysis of your current retirement plan and affordable 401k management and can minimize hidden fees and manage and monitor your account on your behalf.
There is a limit to that and each company can set a different one. However, this sum can’t be more than $55,000 per year (or 100% of your salary). While there are different plans and requirements for each, it’s safe to say that any matching program is a good choice. It’s best to learn more about the one your company is offering in advance and even calculate your employer match in a 401(k) before you follow the next steps. To be able to receive contributions to your pension plan from your employer you must participate in your employer’s retirement plan and keep contributing to your account regularly.
You must also be familiar with vesting. The employer match program you participate in comes with a vesting schedule. This is in order to encourage you to contribute to your retirement plan monthly or so and stay with the company for as long as possible. But it also means you don’t own your employer’s contributions immediately.
While you will indeed receive them from the first time you invest money in your 401(k), the funds added by the company won’t officially be yours yet. It can take a few years until you’re fully vested so that’s yet another detail you need to know in advance.
However, assuming you aren’t planning to quit this job any time soon and are dedicated to the idea of doubling your savings, the exact vesting schedule of your employer shouldn’t be an issue.
Now, to actually receive free assets from your company and be able to double your money quickly, there are some additional actions you can take to make the most of your pension plan. Here’s what I mean:
How to Double Your Money by Making Your 401(k) Work for You
Maximize the match.
There are different matching programs, but each is there to help you increase your savings. However, it’s up to you whether you’ll get as much money from your employer as you can or leave some on the table.
Now, keep in mind we aren’t talking about maximizing your own contribution here, but that of your employer. To take full advantage of it, contribute up to the amount that your company requires in order to get the full employer match.
Believe it or not, many employees miss out on this opportunity to double their money because they don’t track their savings or simply forget about their account.
Most companies offer a default savings rate but it’s not usually the most beneficial one to workers. Because not many employees are interested in managing their finances better, they don’t look into this and often don’t even know they aren’t making the most of their 401(k).
To make sure that doesn’t happen to you, customize your contributions and, after doing further research, pick the plan that will lead to getting the full match by the end of the year.
Avoid front loading.
Front loading your contributions (which means maxing out your 401(k) before the year ends) is one of the worst mistakes you can make related to your pension plan. Not only does it prevent you from receiving the full amount of contributions by your employer that you have the chance to get, but it actually costs you money in the long-run.
Follow the rules.
Your employer matching program has rules that must be understood and followed. One mistake can cost you access to the full employer match, which slows you down on the way to increase your savings.
Things to Keep in Mind Before Investing in Your Retirement Plan
I too was asking myself how to double my money for a long time, until I learned more about the employer match. But that won’t continue forever. There’s only so much an employer can contribute to your pension plan. From then on, putting more and more of your money into this savings account still doesn’t sound like a good investment. So when you get to that point, you might consider investing in an IRA.
Beware of the fees. While the 401(k) plan each company offers exists to motivate workers to take control of their financial independence, it also has fees that might be quite high in some cases.
Paying off your debts, if any are present, is something you should focus on first, before thinking about any form of investment. Whether you have a student loan or credit card debt, deal with this as soon as you can so you can be able to start creating a secure financial future for you.
There is no point in thinking about investments and how to double your money fast in you haven’t taken care of that first. So work hard to set aside $10,000 in a separate savings account first, and then move onto contributing more to your 401(k) on a monthly basis so you can reap the benefits in the future.
Earning in addition to saving is the way to wealth. So to ensure doubling your money, add a new income stream by starting an online business (it costs less than $100 to start one this weekend) or giving any side hustle a try.
Now that you know how investing in your 401(k) can be a way to double your money fast, you are ready to take the first step and participate in the retirement savings plan of your company after understanding your options.
You are being referred to Blooom, Inc’s website (“blooom”) by EveryBuckCounts, a solicitor of Blooom (“Solicitor”). The Solicitor directing you to this webpage will receive compensation from blooom if you enter into an advisory relationship or into a paying subscription for advisory services. Compensation to the Solicitor may be up to $25. You will not be charged any fee or incur any additional costs for being referred to blooom by the Solicitor. The Solicitor may promote and/or may advertise blooom’s investment adviser services and may offer independent analysis and reviews of blooom’s services. Blooom and the Solicitor are not under common ownership or otherwise related entities. Additional information about blooom is contained in its Form ADV Part 2 available here.