What is a 401k plan?

Well, it may sound like the speed-limit on a European highway, but it's not.

Equally, 401 (k)  is not your weight the last time you went on a binge-eating fiasco.

No, a 401 k plan is something that will make you a happier you...when that creeping future finally knocks on your door and says 'let me in!...I'm retirement!'

Essentially a 401 k is just a diversion of a portion of your income, from your wallet to your bank. Your employer sets up the plan, and you agree to it, and thereby the tax-man is thwarted from collecting his ususal take.

That alone makes this plan rather attractive in my eyes.

So perhaps you are wondering: 'who is it that works this financial magic for me so that I can put away for tomorrow what I don't really need to spend today?'

It's no surprise that your bank, insurance company or your similarly secure institution will provide this service. They will normally layout a buffet of financial choices for the hungry 401(k) customer, from delicious money market funds to tasty stocks--all of which will give you that 401 k flavor without that bitter tax-man after-taste!

Benefits of saving the 401(k)-way are first, that you can loose taxable-dollars by increasing your contributions. So contribute all you can and starve the tax-man.

Once you have your handy 401(k) set up, you can sleep peacefully and profitably. All those dollars you are earning from dividends and interest in your account are safe and exempt from tax, until the day when you really need them--the future.

Additionally, your company, bless their hearts, will often donate some funds, sometimes matching you dollar-for-dollar in your quest to save for retirement, making this little 401(k) plan an attraction you don't want to overlook.

Now as we all know, often, when it comes to money, you can be your own worst enemy. Easy-come easy-go is no way to ensure a happy retirement, so that's where the automated feature of your 401(k) comes in.

A little robot, if you like, goes to your company, cheerfully collects your employer's contribution, collects your portion of your pay that you have allocated, takes it down to the bank, puts it in your 401(k) box, where it magically grows over the years...all done for you behind the scenes, so you don't have to so much as think about it until your retirement-day arrives when you can enjoy the fruits of your saving.

What could be better than that?

And the little robot doesn't even need a tip.

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