Learn if it’s smart to contribute to a 401k if you’re not getting a match.
Should we contribute to our 401k, even though there is no match?
Benefits of a 401k are that:
1. Your income is not taxed when deposited into a 401k
2. Your money grows without tax
3. Some people think it’s a forced discipline to save, that otherwise the money wouldn’t be saved,
1. Limited investment options, usually large cap, mid cap, small cap, international and bonds, usually mutual funds with higher fees.
2. Don’t have wider options such as stocks, low cost ETF’s, sector funds. Leaves out gold/silver, technology sector, agriculture & commodities, country funds, etc.
3. There’s a whole universe of investment options and you’re restricted to a limited menu.
10% penalty if not 59-1/2 or if you don’t withdraw money under allowed hardship withdrawal rules or penalty free rules.
In summary, if you are a disciplined person you can save or set up an automatic deduction plan to deduct your investment money into your investment portfolio, have wider investment options in a brokerage account, plus more flexibility to withdraw funds for liquidity without incurring a 10% penalty.