401k Plan » 401k Matching Plans

A few years ago, I met a young man who had recently graduated from college. He had done very well in school and was offered an excellent job opportunity with a big software firm. His starting salary of $50,000 was quite impressive for someone fresh out of school. What impressed me most about this young man was that he was already thinking about investing.

He called me one morning and asked if he could set an appointment with me to discuss his investment options. Later that evening he showed up at my office with a stack of forms and brochures. As he sat down, he explained that he had just accepted a job and he needed help making the right choices with the investment options his company was offering him.

As I looked through his paper work, I discovered that his company offered a 401k plan that matched dollar for dollar on the first 6% of his salary. They also offered a 10% stock purchase employee discount. As we began to talk, I learned that he had no intentions to changing his current standard of living. He had an older but reliable car that he had been driving since his junior year in college and it was paid for. He shared an apartment with a college roommate who had also recently accepted an offer with a nearby company and their rent was extremely affordable. Finally, there were no student loans because he had been on an academic scholarship the entire time he was in college. His plans were to live off of half his income and invest the rest.

As I sat there listening, I could not help but think back to my younger years wondering how far along in life I would be if I had the mindset that this young man had sitting in front of me. Most older adults do not even begin considering thinking like this young man until it is almost too late. Here he sat, discussing investment plans with the salary he was earning from his very first job.

The first thing we did was have him enroll into his company's 401k program. At first, he was hesitant about investing for retirement which seemed so far away. He wanted to build a portfolio that would allow him to reap benefits by the time he reached age 35, which in his mind, seemed like a far away goal. I explained to him that he had an opportunity to receive a guaranteed 100% return on his investment. Not investing in his company's 401k plan was not an option.

At the mentioning of this, he sat up and inquired, "How would I be able to receive such a return that was guaranteed?" I explained to him that his company was willing to match every dollar he invested with a dollar up to 6 percent of his salary. This meant that if he maxed out the 6% matching program, he would invest $3000 of his own money and his company would match it with an additional $3000. I also informed him as his salary increased, so would his matching company's dollars. At that very moment, a huge grin came over his face and he agreed that this was definitely a wise investment choice.

We then analyzed his company's stock performance and determined that this was a stock worth adding to his portfolio. I recommended setting aside another 10% of his salary to invest into this stock. Because he was able to buy it at a 10% discount, he actually hedged against the possibilities of loosing money and had a huge upside potential to earn a 10% return or better.

We then discussed additional investment choices for the remainder of his money. That day, he left my office with the confidence that he had made the best financial decision of his life. Today, he is married with a child and a new home. He still contributes to the 6% matching program and his investments have served him well. When asked about his best financial decision, he will tell you, it was the day he sought advice from his financial planner.

This article has been provided to you by Tony Bass, National Wealth Strategist for Bass Financial Solutions, Inc. If you would like to receive "Learning the Secrets to Maximizing Your 401(k) Rollover and How You Can receive 13.68% Guaranteed… Even If Your Company Doesn't Offer a Matching Program", " please visit: http://www.rollovermoney.info

Source: www.a1articles.com