Roadmap to Riches  
how to invest your 401(k)
Introduction: The Opportunity of a Lifetime
Our 401(k) plan has proven to be history’s most powerful financial tool for accomplishing the important goals sought by most of us as working Americans. Buying homes, educating children, saving for emergencies, and providing for retirement are the primary reasons why we save at all.
The government’s sanction, or “invention,” of tax-deferred 401(k) plans amounts, effectively, to a substantial government subsidy. Some of what we would otherwise have paid in taxes is, instead, deposited into our 401(k) accounts. When we combine this subsidy of tax savings with our employer’s willingness to offer the convenience of an automatic payroll deduction, we can see why the 401(k) for many of us has been the first long-term savings program that has ever actually worked.
The purpose of this book is to help you understand the basics of investing in the light of the unique characteristics and framework of your 401(k) plan.
Two things distinguish 401(k) plans from traditional, pre-401(k) retirement plans:
- The average American, based upon average current contribution levels, will now end up with five times more money for retirement than traditional pensions were scheduled to provide.
- The responsibility for choosing investments now rests with each employee rather than with company owners or financial institutions that chose investments for traditional retirement plans.
Effective 401(k) Investing: Layout a Plan With Goals and a Timeframe
Believe it or not, retirement is almost incidental to 401(k) thinking. If we use the plan effectively for a variety of financial objectives, then retirement, and its financial needs, will take care of itself.
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