A Penny Saved

Ok, I’m fairly certain that even if there are #459382 mistakes that a person can make, this certainly wouldn’t be ranked that low.  This is more like mistake #2.  Right behind mistake #1 which is not participating if one is available.

So what is so big to only be outranked by the non-participation mistake?  It’s simple and yet I find myself on the slippery slope to making it a lot lately.  It is the mistake of forgetting the instant growth that you receive from your employer match.  In my case, I’ve been slipping because my portfolio performed rather poorly last month and brought my year to day return down to below 3%.  I found myself thinking that I could make nearly twice that somewhere else like ING or HSBC.  And that’s where I caught myself.  This time.  You see, my employer matches 20%.  That’s an instant return on my money of 20% plus it compounds because I then gain on that 20% bonus.

Taken into effect, if I get an instant 20% on my money plus it’s been returning about 3% so far this year, the math puts my return well over 20%.  That’s almost better than the interest rate on a couple of my credit cards.

Moral of this story is that if your employer matches your money into your 401(k), do your best to catch yourself when you start thinking that your return isn’t all that good because your employer is making it spectacular.

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