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The 401K Maximum- How to Get Maximum 401K Value

by Fern LaRocca CFP®

in 401K,401k Contribution Limits,401k Contribution Limits,401k limits,401K Maximum

Ok- everyone wants their 401K account to go up in value all of the time- right? Well, fat chance. Markets go up and down all the time and lately it’s more down than up. So hang in there because what goes around comes around again and again. Here are some tips to smooth out the bumps and get the maximum 401K values you can:

Diversify across categories. What’s a category? It like stocks, bonds and cash.

Diversify across asset classes. What’s an asset class? It is like large cap, mid cap and small cap could be under your stock category.

Diversify across asset styles. Let’s say you have a stock category and you have a large cap stock fund in it. You could further diversify into a large cap value stock fund and a large cap growth stock fund.

Keep your costs low. Use only no-load mutual funds or index funds.

Get an asset allocation and stick with it. What’s an asset allocation? It is the percentages that you put into each asset class. Say you want to put 60% into stock. You could put 20% into large cap, 20% into mid-cap and 20% into small cap.The higher you put into stocks, the higher the risk and volatility of your portfolio.

Rebalance once a year. That means if you put 60% into stocks at the beginning of the year and it grows to 65% at the end of the year, take that 5% and add it to another class that is doing poorly. You will be constantly selling high and buying low. Guess what? That makes you money not limit your gains.

Stick with it! No matter what Fox News or famous Joe Money blogger tells you, if you keep moving in and out of funds, you are gambling -not the right way to get maximum 401K values.

Get the 401k maximum balance going for you right now.

Mike Stankavich at

Fern, you’re absolutely right – market timing has been proven not to work over and over and over again. There will always be a few people who get it right by chance, and they are often the ones that end up in the headlines. But it just doesn’t work consistently, and you do indeed end up costing yourself over time.

There are a lot of good guidelines for asset allocation out there. A lot of them consider the risk and volatility of the investment class versus your age. I used to do that, but recently I decided to shift to a more balanced allocation and stick with it.

Another approach that works well for those folks who don’t want to try to understand asset allocation is to use a life stage mutual fund. Life stage funds are set up for a target retirement year, and gradually shift their allocation from aggressive growth to conservative capital preservation as the target retirement year approaches.

Fern LaRocca CFP® at

Good for you- finding an asset allocation and sticking with it!
Target date and life stage funds are coming out to satisfy our laziness around picking an asset allocation. Studies are coming out that they are low return performers and they also have high fees. Pay yourself and stick with a mix of no-load, index, and Exchange traded Funds.