I’ve made a lot of financial mistakes along the way. Living beyond my means has been the biggest. But one thing I’ve done well is I have consistently contributed to a retirement plan.
I’ve been fortunate to have worked for large companies with a 401K (or 403B) match. And I’ve taken advantage of getting free money.
Both companies generously matched 100 percent of a portion of what I contributed. The first company matched the first 6% I contributed, and my current company matches the first 10%. This is a great way to double part of your money. Even if a company matches at 50 percent, that’s still an incredible return on your investment. And if you’re like me, you let the money sit for years in the market.
Guiding principles I followed:
- Always give something every paycheck. The more money, the better. And ideally give at least what the company matches. In really tight times, trim back a bit, but continue to invest no matter what.
- Bump up a point or two each year with raises. Over the span of a couple of decades, there were some lean times. When I had to scale back on my contributions, I’d try to intentionally keep bumping it up another point or two…giving myself at least part of my annual raise.
- Come up with a portfolio that makes sense to me. My diversification has changed over the years. I’ve tended to be a little more aggressive to build up more over time.
- Leave it alone; ignore the ups and downs of the market. I know people who sell every time the market dips. Or they get too caught up into timing the market. Unless you’re Warren Buffett, you will not time the market perfectly. I just ride out the good and bad markets. I’m a big believer in dollar cost averaging. The down times make for good buying opportunities, so I like to just keep chipping away at it a couple of times a month with each paycheck.
- Check in with a financial advisor once a year. I’ve done a lot of reading on my own, but it’s still good to check in with a professional. Every year, I meet with a Fidelity representative through work and look to see if I’m on track. They also have lots of planning tools on the site.
Currently, my retirement portfolio is where the bulk of my wealth is. As I get more into real estate, I’m hoping that will shift. But I feel like slow and steady has been paying off for me on the retirement portfolio.