The concept of the 401k investment strategy has actually been around since the late 70s, early 80s. Before the economic downturn of 2007, people looked forward to their 401ks; advantages from these plans were usually the ability to get lower taxable income, savings and earnings that would grow without having to remember to make deposits, as well as getting free money from an employer.
When we examine the history and benefits of the 401k, the idea of the 401k came about in 1978, when Congress decided that Americans needed the encouragement to save their money for retirement. If people were given a way in which to save, while at the same time lowering state and federal taxes, they would take advantage of it and make responsible investments to save for their future. This is how the Tax Reform Act was passed, authorizing the creation of a tax deferment savings plans for employees; the name comes from the Internal Revenue Code section 401, paragraph K.
While the economic downturn in the United States made many wonder if they would still have a 401k, the concept can actually be very helpful in keeping money for a rainy day or an emergency situation. So why should you consider a 401k and not say, stocks or bonds? Actually, people could consider all three in terms of making sure there is enough money for their large purchases, like a home or that of paying for college tuition, explains finance professional Carlos Hank Rhon.
The main benefit of a 401k is the ability for employers to match what it is their employees put in to the 401k. Employers aren’t required to actually match the contribution, however most will.
Most bank accounts now offer convenient online banking. Therefore, it may prove worthwhile to search for an account that can be accessed and managed easily online in order to maintain and monitor your account transactions. When it's time to open up a new bank account, it can seem confusing and overwhelming to learn about all the options that are available to you. Whether you're sticking with your tried-and-true bank, or switching institutions all together, there's a lot to learn about new accounts.
While there are a number of options available to you, it's important to remember to search for the account that's best for your needs.