Are there risks with a 401k?

Answer:
Yes. 401K plans are not guaranteed

and have the same risks that investing in stocks, bonds, and mutual funds have. If the investments that you have selected in your plan do well, you’ll see your 401K’s value rise. If the investments do poorly, you will see the value of your 401K plan go down.

In addition to market risks, 401K plans have other associated risks. For example, one risk involves taking out loans from your 401K plan. While you may be able to take out a loan, doing so reduces the plan’s effectiveness of growing. The more you take out, the less money you’ll have earning interest and compounding.

Another risk is not contributing enough to the plan. At the very least, make sure to contribute enough to fully receive any matching funds from your employer.

Making investment choices that are too conservative or too aggressive is a risk that many people take. Going too conservative means that you will likely not have enough growth for retirement. If you are too aggressive, you could lose a great deal of money without the safety net that bonds can provide.


	more Q&A sessions like this
	What are Qualified Annuities? What is a 401K? What are Retirement Annuities? What is a Rollover? What are Tax Sheltered Annuities? What is a Traditional IRA? What is a Qualified Retirement Plan? What is a Profit Sharing Plan? What is an Education IRA? What is a Tax Shelter?