How to maximize the value of your 401 360x270 - How to maximize the value of your 401(k)

How to maximize the value of your 401(k)

Over the past couple of months, we have been sharing ideas on how to grow your investment. We just thought it a good idea to include the 401(k) in our investment series. We know that many of our readers will be interested in knowing how they can maximize the value of their 401(k).

Let’s jump right into it.

 

You must learn to participate

You must learn to participate - How to maximize the value of your 401(k)
If you work for an employer who offers you a 401(k) plan, you must learn and be willing to diligently participate in the plan. It is quite simple, the sooner you start contributing to the plan, the sooner your money will start earning returns on it. This is an investment that rewards you depending on your commitment.

 

Always go for the company match option

Always go for the company match option - How to maximize the value of your 401(k)
The 401(k) plan simply involves money being directly deducted from your salary and deposited to your 401(k) account. As an investor, if you think of it as so, you are free to select the percentage of your salary to contribute. Often, your employer will always match your contribution and this basically means you have doubled your investment. How easy is that? Be sure to go for the maximum match option available.

 

Planning is your friend

Planning is your friend - How to maximize the value of your 401(k)
You must make it a habit to plan your portfolio. Your 401(k) is essentially part of your investment portfolio therefore you need to do proper planning in order to reap maximum benefits. Be sure to start your investment at a very young age, build on your experience over the years and be aggressive with your stock choices. You will enjoy the benefits.

 

Learn to diversify

Learn to diversify - How to maximize the value of your 401(k)
We all have heard that it is never a good idea to put all our eggs in one basket. This is a concept that is very relevant when it comes to investment portfolios. Your 401(k) is basically your retirement package therefore it is a good idea to spread out the risk among different investment options. Best case scenario, all your investments may actually end up paying off.

 

You must avoid loans

You must avoid loans - How to maximize the value of your 401(k)
Your 401(k) is your investment and most likely your retirement plan therefore avoid at all costs borrowing on it. You are more likely to spend the loan money on things that will not benefit you in the long term hence losing your 401(k). Be a savvy investor, and stay away from loans.

Your 401(k) is your journey to a happy retirement therefore do your best to take good care of it and maximize on its returns.

These are the 5 main differences between Credit Unions and Banks 360x270 - These are the 5 main differences between Credit Unions and Banks

These are the 5 main differences between Credit Unions and Banks

If you have been following our previous posts which we believe you have, then you know that credit unions are similar to banks, however just smaller and mostly community based. Here, we take a look at 5 of the main differences between the two.

 

#1 The interest rate levels differ

The interest rate levels differ - These are the 5 main differences between Credit Unions and Banks
Credit unions are purposefully established for the benefit of members therefore their structure when it comes to interest rates has to favor the members. This therefore means that interest rates will be much lower in comparison to banks which are mainly profit making institutions hence they are purposefully meant to serve the best interests of the shareholders.Banks typically charge interest rates that are between 4 and 10 times higher than what you would pay in a credit union. However, when it comes to online banks, they are believed to offer more competitive rates when compared to credit unions.

 

#2 The loan and credit card rates differ

The loan and credit card rates differ - These are the 5 main differences between Credit Unions and Banks
As we have established, credit unions generally offer similar products in the finance sector as compared to banks albeit at cheaper rates.If you are looking to take a car loan, a mortgage, a personal loan or a credit card then your credit union will offer you a better deal in comparison to your bank. Their percentage points on these products are at least two points lower.

 

#3 Their fees differ

Their fees differ - These are the 5 main differences between Credit Unions and Banks
Credit unions are known to have fewer fees when compared with national banks. As a matter of fact, most credit unions will not charge any fees for withdrawals, checks or electronic transactions. In addition, most accounts whether checking or savings will not require an account servicing charge or even a minimum operating balance. However, when it comes to banks, these costs are all inclusive and may increase your bank transactions by hundreds of dollars.

 

#4 Their loyalties to the customer differ

Their loyalties to the customer differ - These are the 5 main differences between Credit Unions and Banks
As we have established, banks are primarily business ventures with a loyalty to shareholders. This means that they are led by a desire to maximize profit therefore, services extended to the customers tend to be higher. Credit unions on the other hand are non-profit ventures established for the benefit of the members hence their loyalties are first to its members. This means that services will often be customer friendly.

 

#5 The quality of services differ

The quality of services differ - These are the 5 main differences between Credit Unions and Banks
Because of the small size of credit unions and the fact that they are community based financial institutions, the services they offer tend to be more personalized. In most cases, tellers will get to know their customers by name, therefore treating them as though they are dealing with a friend. Banks on the other hand serve millions of customers therefore the probability that a teller will recognize you is minimal. In fact, most banks have introduced ATMs as a way of limiting interaction between the banks and is customers.

It is therefore safe to conclude that credit unions are much better than banks. You ought to check them out.

 

 

Here are the pros and cons of credit unions 360x270 - Here are the pros and cons of credit unions

Here are the pros and cons of credit unions

Credit unions are finance institutions that essentially do almost all what banks do. Through a credit union you can get access to a savings, a checking or amoney markets account, as well as access to a personal or a car loan, a mortgage or a home equity loan. However, these credit unions are often much smaller institutions designed to serve small communities of people.

The process of choosing a credit union is somewhat similar to that of choosing a bank basically because you are always looking out for the financial institution that will offer you the best service, at the best rate and most importantly ensure your money stays safe.

Here are the pros and cons of a credit union.

 

#1 They are primarily not for profit institutions

They are primarily not for profit institutions - Here are the pros and cons of credit unions
Credit unions are primarily not for profit meaning their loyalty lies with the members who are the primary owners. This means that their services will always be structured for maximum benefit to the members. The disadvantage with this is that since they are not for profit, shareholders are not likely to get much value from their shares in the company in comparison similar shares in other profit making institutions.

 

#2 They are more flexible

They are more flexible - Here are the pros and cons of credit unions
In comparison to other financial institutions such as banks, credit unions are much more flexible in terms of their assessments before granting loans to customers. They are also more human in the way they handle customer bank accounts. This is owing to the fact that customers are actually shareholders. The only challenge with this is that credit unions often expose themselves to risks of default on payment by members because of leniency when doing credit checks.

 

#3 Branch and ATM locations are limited

Branch and ATM locations are limited - Here are the pros and cons of credit unions
Due to their small size, credit unions have a smaller branch and ATM network and this means they are only available in limited locations. This becomes an inconvenience especially if you need to access cash quick. However, some credit unions have solved this by incorporating an online portal that enables its members to carryout banking services from anywhere provided there is internet connectivity.

These may be referred to as cons but in actual sense, they do not affect your bottom line. The financial services you get from credit unions are much more beneficial and friendlier as compared to other financial institutions. What we mean is, these are not really cons in our opinion.

Let us know what you think about this piece.

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3 tips on how to open a credit union account 360x270 - 3 tips on how to open a credit union account

3 tips on how to open a credit union account

By now you probably know that credit unions are some of the best places to save money as well as get loans. They offer a number of free services such as free checking, and have very competitive rates for their savings accounts as well as loans.

A number of people have passed on the chance to open an account with a credit union because they feel intimidated by the process. Unknown to them is that the process is quite easy.

 

Here are 3 tips on how to open an account.

First: You have to play the field

You have to play the field - 3 tips on how to open a credit union account
Registering for membership to a credit union is often the first step to joining the union. You cannot enjoy its benefits if you are not a member. It is easy though. Generally, members of a credit union usually have something in common. You may be eligible to join the union because your employer has a relationship with it, the credit union belongs to the community you live in or your occupation may automatically entitle you to membership. These are just some of the things that may make you eligible to join the credit union but keep in mind there are many more. In most cases you will have several choices to choose from so be sure to choose a credit union that you feel is offering products and services that suit you and at a rate that best suits you.

 

Second: Make a modest deposit

Make a modest deposit - 3 tips on how to open a credit union account
Once you have made the decision to join a particular credit union, the account opening process is very straight forward. It’s as simple as walking in and filling out an application. Just like with any other application for a financial account, you have to provide your details such as Tax ID No. or your Social Security No., physical address, a valid identification document and of course the reason you think you are eligible to join. Membership starts the moment you purchase shares in the union which is done by a modest deposit. It mostly ranges between $5 and $10. Be aware that some credit unions may decide to check your credit history before opening your account.

 

Third: Start using your account

Start using your account - 3 tips on how to open a credit union account
We told you it was easy. You are now a member of the credit union and you now have access to all the services. If you are employed, it is much easier and convenient to have your employer directly deduct your union contributions from your paycheck. This means it goes directly hence lowering your chances of forgetting to make your deposits. You can also opt for electronic payments. Be sure to set up text or email alerts.

It is good to know that there are federally insured credit unions and these are the safest for you since your money is as safe as it would have been in a bank account.

What has been your experience with credit unions? We would love to hear from you.