Beyond Immediate Tax Savings: 4 Advantages of a 401(k)
You've undoubtedly heard financial professionals sing the virtues of 401(k)s. However, if the only feature you associate with the retirement saving plan is its tax advantages, you may be missing out. Beyond the money you can save, thanks to the pre-tax nature of most 401(k)s, there are plenty of other ways a 401(k) plan can benefit you. Here are four of them.Have you ever noticed how difficult it can be to pay off a high-interest loan or credit card? That's due to compound interest working in favor of the lender. With compound interest, you pay interest on the principal borrowed and on interest previously added to your debt.For example, if you have a credit card balance of $5,000 and make a $200 payment toward it instead of paying it off in full, interest charges are added to the remaining $4,800. The following month, you're charged interest on the remaining $4,800, plus the added interest from the previous month.Continue reading
You've undoubtedly heard financial professionals sing the virtues of 401(k)s. However, if the only feature you associate with the retirement saving plan is its tax advantages, you may be missing out. Beyond the money you can save, thanks to the pre-tax nature of most 401(k)s, there are plenty of other ways a 401(k) plan can benefit you. Here are four of them.
Have you ever noticed how difficult it can be to pay off a high-interest loan or credit card? That's due to compound interest working in favor of the lender. With compound interest, you pay interest on the principal borrowed and on interest previously added to your debt.
For example, if you have a credit card balance of $5,000 and make a $200 payment toward it instead of paying it off in full, interest charges are added to the remaining $4,800. The following month, you're charged interest on the remaining $4,800, plus the added interest from the previous month.
