5 Common 401K Mistakes

July 23rd, 2007  |  Published in 401K

It wouldn’t be a full week if a major newspaper or magazine didn’t put out a X Common 401k Mistakes post and this week it’s USA Today’s turn. Their 5 common mistakes aren’t that mind-blowing and you’ve probably seen them before… they are:

  • Rejecting free money: i.e. Not participating. Duh. Participate in your 401k, especially if your employer will give you a match!
  • Loading up on company stock: Don’t put all of your eggs in one basket. So, not only should you not load up on any one stock, don’t load up on the company that pays your salary because if there’s a bad downturn and you lose your job, chances are the stock won’t be doing well either.
  • Chasing performance: This is good general investing concepts, past performance is not an indicator of future performance… so don’t chase after what was once a good deal.
  • Investing too conservatively: Ahhh yes, if you’re young, put more in stocks. If you’re 20 and you have a lot in bonds, you’re a fool and not taking advantage of the one resource you have an abundance of – time.
  • Failing to fine-tune: This isn’t so much fine tuning as checking in. You should adjust your funds at least once a year but don’t go overboard, if you check your 401k everyday… you need a hobby.
  • The only surprise was that the fifth mistake wasn’t the foil, investing too aggressively, of the fourth mistake, investing too conservatively.

      

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