Most businesses, small and large, have a 401k plan. If you are self employed, you can set up an individual 401k fund so that you too can save for retirement. It is a simple process to begin. You fill out a form and choose which funds to use for your investing. There are bookshelves devoted to helping you decide how to invest your money but what it all comes down to is time and risk. How much time you have left in your working life and how much risk you are willing to tolerate. The way the stock market works is that you invest in funds and over time, those funds grow. The funds grow because the price of the stocks goes up and at the same time, you are constantly adding to the fund with your contributions.

How quickly those funds grow and to what extent depends on your tolerance for risk. On the one hand, a volatile stock, like gold, could (in the short term) yield a return of ten fold. You invest a thousand dollars and in a short time, you have made ten thousand. But, timing when to sell that stock is the key — gold is notorious for ebbing, so you need to get out of the stock before it falls. Most people do not have the time or talent to play the market in this way. Better to invest in mutual funds, which by their very nature, are less risky because they are made up of many kinds of stocks.

When you leave one job for another, you do not want to lose your hard work. That is where the 401k rollover comes in. By a simple process, you can bring your 401k plan with you to the new job. Many companies offer the 401k to new employees after 90 days or, sometimes, 6 months. When the time comes, you simply fill out the form and send it to your old employer. It sometimes takes weeks or months for the rollover to execute. Generally the fund manager is only going to calculate matching funds twice a year and so the rollover 401k happens during that time. Luckily, during this lull time, your account is still growing; it is just not getting any fresh influx of money from you.

The key to good retirement planning is to have a good grasp of how much money you spend right now (so that you can wisely choose how much to contribute to the 401k plan) and how much you will need for retirement. Once you have these figures nailed down, the hard part is done. Then you let time and the market work their magic.

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When I left one job to go work for another, I had to wait a certain time until I could enroll into their 401K plan. The company only had 21 employees and one third of them had started within the past year. Since the company was small, it had been using a local financial broker in the city and a representative come down to the office to talk with all of us.

He spoke to each of us to see how he would best invest for our individual needs. I told him that I since I still had over twenty years before I would retire and was thinking of investing more on the aggressive side. On the forms that were in front of us, there were well over a hundred and fifty different ETFs, mutual funds and bonds, but nothing towards individual stocks. He told me his suggestions and at the time I wasn’t has informed as I am now, so I took his advice and agreed.

I received a quarterly report from them about nine months later and noticed that there wasn’t much growth in the portfolio. I ask some of the other employees how they were doing with their investments. Out of the five of us that discussed our investments, none of us were the same age, marriage status, or had the same amount of dependents. The odd thing was that roughly 60% of each of the portfolios were invested in the same funds. We realized that these funds that we were invested in, were high commission earners for the “salesman”. These funds were also the laggers in the portfolios.

I tried to reach the representative who handled my account to get answers, but it was next to impossible to get to speak to him. I spoke to the owner of the company I worked for to see if he could make contact to get some answers, but it never happened.

I left the company about three months later and decided to move my money out shortly after leaving. They informed me that I shouldn’t be looking to take the money out, “I would do better if I’d just leave it in there”. I received my annual statement from the firm and noticed that my account had increased by less 5% overall.

I decided to get my money out and put it in an IRA with one of the online discount broker. They had me jumping through hoops with all the forms and procedures that it took almost two months to finally get transferred. They told me that there would be early withdrawal frees and penalties. At that point I didn’t care, I just wanted it out of their hands. If it wasn’t for the online discount broker going straight after the firm directly on my behalf, who knows how long it would have taken.

After the firm took out its management fees and costs as well as the penalties for removing my money, I had only a 2% gain for the time that I was invested in the plan. The firm was able to take over three percent of the profits for themselves.

When someone else is handling your investments, you need to know what you’re being charged for otherwise you might lose a good portion of you retirement fund to costs. You might think of it as only 1% of your portfolio each year, but consider how much that first year of capitol would be twenty years later, it adds up once you factor in compounded interest on the principal from those earlier years of investing.

Be aware of what you’re paying for, it could mean the difference in when you can retire.

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One individual that has help me to understand and make good choices in the stock market has been Jim Cramer. I’m sure you heard of him and most likely if you’re looking to invest in the stock market, you’ve watched his daily show on CNBC. There’s a lot more to the man and his philosophy than just his one hour show Monday through Friday.

The latest book that he’s written about the stock market is titled “Stay Mad For Life”. The title has is a play on words in regards to his show, Mad Money.

The book starts off with Jim explaining in detail how you need to start preparing for retirement without foregoing the needs of the present. A great message that many of us never received growing up, either by our parents or by school. How many of us were ever taught as teenagers to understand the concept of compounded interest or basic knowledge of personal finance?

He continues by showing us the importance of enrolling into a 401K plan has soon as possible and that the longer you wait, the more money you will miss out on in the long run when it’s time to retire. He writes about how to properly invest and to be actively involved with your retirement fund (he refers to it as retirement capital) and dispels some misconceptions about how certain employment funds can help you.

In the next section he talks about investing for a lifetime, not just investing for your later years. Investing for your retirement and not for the present is something that he goes into detail with and what you can do to make that happen. Explaining the difference between stocks and bonds and how a balance between them will help you.

He writes about the importance of family finances, especially for those with children. The need to teach your children while they are young about money and how it works. Going into specifics about home ownership and getting the right mortgage for your investment.

He also has released twenty new rules of investing. Along with his other rules and his ten commandments, they will give you a clearer picture of what you need to do when investing in the stock market.

Revealing the five bull markets along with twenty stocks for the long term is a section in the book that I found very interesting. I’ve looked back at these stocks and over the long term they’ve have done great and are well-run companies that should continue to do the same in the future.

In his last section he goes into detail about mutual funds. This section is great for those who don’t have large amounts of capital to get started growing their portfolio.

All in all, I found this book to be very informative and I recommend it to anyone wanting to invest in the stock market. I’ll be going into more details about each chapter in later posts but for now I wanted to tell you about a great deal that I took advantage of myself.

After I tried the free trial of Action Alerts Plus investment service, I got so much out of it that I joined for the whole year. Along with my paid subscription, I received Mad Money for free!

First, click the banner below, or the one in our sidebar, to sign up for his 14 day free trial of Jim Cramer’s Action Alert Plus.

After the two weeks are finished, if you sign up for a yearly membership you’ll continue with this great service and get Mad Money for free.

If for some reason, you’d rather just go ahead and buy the book right now, click the banner below. You can purchase it through amazon.com’s secured server. After you read it, tell me what you thought of it.

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The best way to do that of course is to start as soon as you can. Many people who are within ten to fifteen years away from retirement are trying to catch up to make sure that they have the money needed for their retirement years. Why is that? It’s because twenty years ago pension were becoming a thing of the past and the 401K plans were starting to make a name for themselves as the way to prepare for retirement. Unfortunately many people didn’t think that taking a portion of their money to put in a fund and not being able to touch until they were 59-1/2 years old made any sense. A bunch of twenty-something year old adults had what they thought were better ideas.

Looking back, they now realize that it was a big mistake not to take charge of their future and are now trying to put the maximum amount allowable by law in their 401K plans to prepare for what’s to come. Many even started to invest on their own, with money that they put in a discretionary account to increase their income by doing what is referred to as day-trading.

I was one of the many that didn’t think about retirement until I was in my thirties.

When I finally started to put money in a 401K plan, the stock market wasn’t doing so good. The dot-com era was just imploding and many investors were taking a big hit to their portfolio. Of course the stock market recovered, but the damage was done. Many of the day-traders never even bothered to come back after the devastating blow that was dealt to them.

Almost ten years later we face the same damage to the stock market that happened before (and most likely will happen again at some point in time). I’m sure that your retirement account has taken a beaten and you’re wondering if you should continue to invest in the stock market. I feel that these corrections to the stock market will happen every so many years and you need to be prepared to see the warning signs of the impending doom that will come. The only way that you can be prepared for the future is to start working on it now, in the present.

This site is designed to help and guide you in making your future more secure and if you play your cards right you may even be able to start retirement a couple of years earlier. We’ll openly share what worked, and didn’t work for us and we’ll review and recommend various programs and books that might be helpful to you.

If you have any questions on what we talk about here, please post in the comment section of any article and we’ll do our best to help you.

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