Those who are motivated to get ahead in this life know that they need money to do it. There are many ways to make money but only so many ways that are tried and true that will work for just about anyone if they follow some basic rules and principles . Just about everyone has to work for a living but those who either choose a lucrative career or find intelligent ways to invest their money are the only ones who seem to have any left over to do anything with. Some people want more than others and this world is full of all kinds so that is to be expected, but everyone should want to at least do something to prepare themselves for their retirement. You do not necessarily have to hire a CPA firm to analyze your net worth and guide you on your investments because sometimes all you really need is a retirement account.
People have been investing in company-sponsored retirement plans since the 1980s in order to save for their futures. This became a popular strategy after a pre-tax income deferment provision was found in the Internal Revenue Code that was placed there in 1978. A benefits counselor named Ten Benna found it and quickly connected the dots that made it clear that one could save for a retirement significantly faster if they were able to defer a portion of their income before it was taxed to a savings account. This process evolved over the years to involve low-risk investments that could help retirement accounts grow more quickly by having the money go into a mutual fund instead of just a savings account. Mutual funds pool investment capital from many different sources so that securities like stocks and bonds can be purchased.
The maximum annual pre-tax contribution that one can make to their 401K is $17.500, as of 2014. Many employers who offer 401K plans do so with a matching contribution up to a certain percentage. It is rare but some companies will match whatever amount their employee contributes, but it is much more common for them to match somewhere between 100% of the two to five percent of the income that their employees earn and contribute. Anyone who works for an employer who offers a matching contribution should definitely participate in the retirement plan, especially if the matching amount is five or more percent because even if the monies are withdrawn early, the monetary penalty for doing so most likely will not exceed the amount of free money that was matched by the employer.
A 401K is a retirement fund, not a checking account so it is important for anyone to know who is contributing to one that the money going into it is supposed to stay there until retirement. There are some understandable reasons for someone to want to make an early withdrawal like a financial hardship or for a down payment on the purchase of a home, but in almost every case one is better left to leave the money there for when they need it later in life. Most companies have a vesting period that requires that people are in their employ for a certain amount of time, sometimes 3-5 years, before the employer’s contribution ‘sticks’ to the account. This means that if there is a three-year vesting period, if an employee quits or is separated after two and a half years of employment, they do not get to keep their employer-matched portion in their 401K account. They will however, be able to keep the money that they personally contributed.
Many people before they even know it begin a real estate investment plan when they purchase their first home. They may need a home to live in and raise their family in regardless, but when they end up with some disposable income that they want to invest on top of their 401K contributions, they may find themselves upgrading homes and keeping their first as a rental property, Many people who have found a way to be independently wealthy have done so by way of real estate. Mortgage accounting assistance may not be needed for someone at the one or two home level but when one starts to rack up residential or commercial properties, tax season can be a nightmare without having a knowledgeable accountant who knows what they are doing when it comes to real estate. All kinds of helpful financial services can be located within a CPA firm for anyone who is looking to improve their lives by saving and investing, and anyone who wants more than just a 401K should look into their options.