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Employer Match: Phenomenal Return-on-Investment

Company Match
Photo Credit 401k

I've had several recent conversations about the lackluster performance we saw from most sectors last year.

Discussions start with someone expressing frustration about slow investment growth, and they devolve into a round of Twenty Questions about big returns.

In retirement investing, there will be up years, down years and flat years. I know it's easy to become frustrated like these folks. However, when you start to feel blinded by a hunger for big growth, I encourage you to read through this particular set of posts from the Smart401k blog rather than seeking information about the next big thing. And think about this investment:

The Match

What if there was one investment that could consistently deliver an outstanding return - an investment that wasn't dependent upon stock and bond returns? An investment like this does exist. It's right under the noses of 401(k) investors, and many don't take full advantage. The investment, of course, is your employer's matching contribution.

How else can you invest money out of every paycheck and have it instantly earn a 25%, 50% or even 100% return? All you have to do is ensure you're contributing enough to max out your employer's matching contribution.

There are a couple things to keep in mind:

(1) Understand the vesting schedule for your employer's contributions. Vesting refers to the amount of time you must work at a company before you have full ownership of employer contributions.

(2) In some cases, if you contribute a large portion of your pay for the first few months of the year then halt contributions for the remainder of the year, you may not receive the full match. Keeping your contributions consistent throughout the year ensures you don't reach the maximum allowable contribution before you've received all the matching funds your employer is willing to give.

(3) If you truly can't afford to max out your employer match, increase your contribution each year. A 1%-per-year increase, or even a fraction of a percent, means you're moving in the right direction. Increase your contribution by more when you get a raise.

So, during the flat years, take comfort knowing your company match is one truly great investment.

If you'd like to discuss matching contributions or general retirement planning, our adviser team is available at 877.627.8401 or

Charlie Koch

Senior Investment Adviser

*The availability of an employer matching program does not guarantee that investments held in any particular employee retirement plan will be profitable.

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About Smart401k

Smart401k is a web-based investment adviser providing unbiased advice to help employees invest in their employer-sponsored retirement plans. Smart401k provides service to almost 11,000 clients who collectively have more than $1.5 billion in assets. Individuals receive personalized investment recommendations based on the funds in their plan and support of professional investment advisers available to answer all investment questions. Based in Overland Park, KS, Smart401k can be found at