What Is 401K? How to Get Best Results
By Saghir Aslam
Rawalpindi, Pakistan

(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)

Those who seek advice do better for their future.

People who get professional advice about their 401(k)s save more and have a better chance of meeting their goals. Yet few people seek out that help.

For instance, 74 percent of people who had professional help knew how much money they should have stashed in their 401(k) plans by the time they stop working.

Financial professionals aside, most workers were also ignoring the free tools made available to them: Sixty-Four percent of savers said their plans offer a retirement income calculator, but only 38 percent used it. Similarly, 59 percent of participants had access to tools that could help them figure out how much income their current savings would provide once they were in retirement, but only 37 percent used them.

People spend twice as much time shopping for a new car or planning a vacation as they do researching their 401(k) options.

And even when they have the options of getting help with those decisions, they rarely take advantage of it. That is despite the fact that 70 percent of them said they would feel more confident about their decisions if they could get financial help. Only 39 percent said they were comfortable making those decisions on their own.

We need to spend more time planning doing your research and home work. Pay you late and you will have wonderful, enjoying your grandchildren and great-grand-children if you now spend time planning most important part of your life which many do not. Yes we do have time we need to plan. Planning at young age when you first starts working will bring you happy results. Today all information is available on the web. Best is to discuss with professional and get advice, it will be the best money spent. There are many options available you must study research beside what is best for you.

In addition to saving more, people who get advice with their 401(k)s are also more diversified. People with guidance invest mutual funds, compared with for people who don’t get advice. They are also more likely to stay the course and avoid portfolio changes when markets are volatile, this is key.

So what would it take for people to ask for help? Not surprisingly, the biggest life change by far the one that pushed them to think seriously about saving – was getting close to retirement.

Other major life events such as starting a new job, getting married or having a child, barely had an impact. But many advisers say that those are the kinds of events that should be encouraging people to revisit their retirement plans and be sure they are on a path to meet their goals.

People should be maximizing the level of advice and guidance every step along the way rather than waiting until the last five years, when it really could be too late.

(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr. Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, or does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr. Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr. Aslam does not have anything for sale.)

 

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Editor: Akhtar M. Faruqui
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