By Lawrence Groves
Many of the brightest and hardest-working marketing and
advertising people in the country are obsessed with getting
to spend money and, if necessary, to go into debt to do so.
Absolutely all the media that reach you every day are designed
to get you to spend money. In order to save money in this
environment, you will need determination to withstand the
constant pressures to spend now.
What is it that separates those who are successful from those
who are not?
Successful individuals have a strong personal vision of what
they want and why they want it. That vision gives them the
strength to stick to their strategies even when doing so is
uncomfortable. It gives them the determination to persist when
they are discouraged. This is the same characteristic of women
entrepreneurs and is the reason their new, small businesses
The 401k Plan
Today, the 401(k) plan has become the main investment vehicle
for working women to save for retirement. But many donít take
full advantage of their plan, and this could leave them with a
lot less at retirement. Here are some steps we believe you can
take to improve and eliminate any retirement worries about
whether or not your retirement will be pleasurable or public
charity; or whether you will have all the free time to spend
with your family or friends.
1. Increase your contributions to the maximum that you can
manage. Many women contribute just enough to take advantage of
their employerís matching contributions, and then they stop.
adding more to your account, beyond the matching
youíll end up with more in retirement.
2. Invest at the start of each year instead of taking a little
bit out of each paycheck. Nothing in the law says you have to
invest in a 401(k) plan a little at a time, from each
By investing early, youíll put your money to work sooner for
3. A few years ago it was reported that more than 30 percent
the money in 401(k) plans was invested in money-market funds
similar accounts. For investors nearing retirement, that may
appropriate. But most workers in their 40ís and 50ís need
in their retirement investments. Put more of your investment
fund in equities and less in money-market funds.
4. Research indicates that over long periods of time,
small-company stocks outperform large-company stocks. Since
1926, In the equity part of your portfolio, shift some of your
money into funds that invest in small companies. Donít put
entire equity portfolio in small-company stocks. But consider
investing at least 25 percent of your U.S. equity investments
in that fund.
5. Numerous studies have shown that value stocks outperform
growth stocks. According to data going back to 1964, large
value companies had a compound rate of return of 15.1 percent
vs. only 11.4 percent for large U.S. growth companies. Among
small U.S. companies, the difference was even more striking: a
compound return of 17.4 percent for the value stocks vs. 12.1
percent for the growth stocks. Donít put your entire equity
portfolio into value stocks. But if thereís a value fund
available to you, consider investing at least 25 percent of
your U.S. equity investments in that fund.
6.Rebalance your portfolio once a year. Your asset allocation
plan calls for a certain percentage to be invested in each of
several kinds of assets. Rebalancing restores your asset
balance and allows for the possibility that last yearís losers
may be this yearís gainers. Diluting your diversification
actually increases risk in your portfolio over time, which is
result thatís just the opposite of what most investors want.
7.Without compromising proper asset allocationĖ use the funds
in your plan that have the lowest operating expenses. Choose
funds with low turnover in their portfolios.
8. Donít borrow or make early withdrawals from your 401(k)
unless that is the only way to respond to a life-threatening
emergency. Furthermore, if you take an early withdrawal before
you are 59.5 years old, your withdrawals will be subject to a
10 percent tax penalty (in addition to regular taxes) unless
you are disabled. Just donít do it.
9. If you leave your job, youíll get a chance to roll over
401(k) into an IRA. Take that chance. In an IRA, you have the
same tax deferral as a 401(k), and youíll have the flexibility
to invest in virtually everything you can get in a 401(k),
10. Hereís the most important thing you can do to maximize
401(k): Keep your contributions automatically payroll
and make them no matter what. Itís simple, but itís not easy.
Half of the households in the United States have net worth of
$25,000 or less. In a typical year, about two-thirds of U.S.
households do not save money.
Remember, to be successful, first, imagine your early
retirement; the Caribbean condo, the yacht, the new Lexus.
Luxury and pleasure as far as your eyes can see. Create a
strong vision, and then donít let go. The power of a clear,
strong vision applies to more than just your retirement
savings. Let your vision shape your life, instead of the other
way around, and all of the time in the world can be yours. You
wonít be spending your Golden Years working at the Golden
About The Author: Want to retire with $1,127,376.04? With more
than two decades of operational and management experience
Lawrence Groves has developed a sharp eye for how businesses
get clobbered with retirement plan fees and how they can
for a sleeker, smoother, strategically focused retirement
As an entrepreneur who quickly built his own successful
consulting business he also empathetically helps other
owners set priorities and create the retirement programs that
get results. Visit www.solo-k.com or