How does the money get invested?
- How does a 401(k) plan work?
- How much can I contribute to my 401(k)?
- How does the money get invested?
- What's a matching contribution?
- How does vesting work?
- What if my matching contribution is in company stock?
- What if I need the money before I retire?
- What if I leave my job?
- When do I have to take the money out?
That part is up to you. You have to choose among the investment choices - typically mutual funds - that the plan offers. While your company may give you information about the funds, you'll need to figure out which ones are best for you. Since you're bearing all the risk, it's important that you choose wisely.
When investing for a long-term goal like retirement, you typically want to invest mostly in stocks, which have the best chance to generate returns that outpace inflation. Adding some bonds or cash to your mix can help reduce the volatility of your overall portfolio. See the Investing section for more on investment strategies. You can also use our asset allocator and retirement planner calculators to determine the best mix of stocks, bonds and cash for your retirement money.
