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If your company offers a 401k plan then you should definitely be investing in it. The problem a lot of people have is being intimidated by the language of investing and the variety of options offered in a 401k plan. They differ from company to company but most will offer a choice of mutual funds with varying degrees of risk to them. Remember, if you leave your job you can take it with you by rolling it over into an IRA or your new company's 401k plan. Most will have a website where you can do all the sign-up and choose how your monies will be distributed. If you're under the age of 35 a good wide spread selection of investments from the somewhat risky to the extremely conservative is a good method to follow. You will break it down into percentages and a good rule of thumb to follow is never put more than 20% of your money in one particular sector or fund.

This can be fun. Remember that it's a slow building of small amounts of money that will build as you add to it and as the funds advance over time. This is for your retirement sure, but having a 401k with a growing balance can be hedged to show as an asset when you're applying for a mortgage, buying a car or refinancing your existing home. If your company has a matching program then your 401k will grow exponentially and after a year you should start seeing what an amazing benefit it is when used properly. I think a good rule of thumb is to invest between 5% and 8% of each and every paycheck. For example if you make $500.00 per paycheck then you'd invest $25.00-$40.00. If your company matches then that ends up being $50-80 per pay period, and it grows quickly.
Having the money spread out over varying degrees of risk ensures that it will grow, all investments do grow over time, though there are no guarantees, one surefire way to mess it up is to invest to heavily in one fund or sector, spread the seed.
If your company doesn't have a 401k plan you can still build one yourself and the beauty of that is when you move to a different job, there is no paperwork because you've been managing it yourself the entire time. I use a site called sharebuilder.com which is a very good concept because you don't have to buy the stocks or funds like you would at a regular trading site, you can set it up to spread out over varying funds, just like you would a 401k but the great part is you can own of a share, essentially eradicating the need to buy individual stocks all at once, it simply spreads it out as value and builds over time. The same rule of no more than 20% in one sector applies, and like a 401k, it can be used to show as an asset when you wish to make other major purchases.
If you're still confused, seek out a financial advisor, preferably someone you know who would be happy to help you out, then you avoid the fees associated with it. Your Dad probably knows just as much as they do anyway, just as an examplecould be your Mom or your sister.
Invest smart, invest to win, and most importantly, invest in yourself.

Learn more about this author, John Russell.
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