y have most of your money in aggressive stock funds. Any time you’re too heavily weighted in one area, it’s a problem.

Proper diversification isn’t that hard to achieve, but there are a few guidelines to remember. While you do need some bond exposure, don’t over do it. Bonds’ record-setting performance of recent years isn’t likely to continue. When it comes to equities, select more than one stock fund. Try to spread your money between funds with stocks in large, mid and small sized companies. And don’t forget to include some international stocks as well.

For the next few years, I recommend those in their 40s put 20% into bonds and 80% into equities. For those in their 50s, 30% to 40% sh

If your boss handed you an envelope filled with cash, would you throw it away? Of course not! But employees do it every day. And that’s not the only mistake they make. I often come across investors who have made simple, yet costly mistakes in their company retirement accounts (401(k)s). If you or your spouse have a 401(k) account, read on to make sure you aren’t making the same mistakes.

The most common mistake I find concerning a 401(k) is that some workers don’t take advantage of it at all. This is especially amazing when many employers match a portion of their employees’ contributions. For instance, let’s say your company matches your contributions dollar-for-dollar up to 3% of your salary. If you make $50,000 a year, that means the company will put in $1,500 if you put in $1,500. That’s a 100% return!

You should make these contributions even if you think you can’t afford it. Most 401(k) plans allow you to borrow against the balance of your account at a low interest rate. So you get the company match and can still access the money in an emergency. (Plans differ, so check the details.)

The second mistake I see people with 401(k)s make is choosing the wrong investments for that money inside the plan. Perhaps they’re very conservative and afraid of the stock market, so they put 100% of their money in the fixed account or a bond fund. What they don’t realize is that those investments may not grow enough over time to outpace inflation. Sure, the balance may continue to increase, but the money will buy less when they take it out than when they put it in!

Some with the wrong investments have what I call ‘misguided loyalty’. These are the folks who have their entire 401(k) in their company’s stock. Perhaps this started because their contributions were only matched when the money went into company stock. Others might feel pressure to be ‘loyal’ to the company. In their minds, not having all their 401(k) in company stock would be like saying they thought their company was a bad investment.

I met a bank employee who had done just that. His 401(k) was 100% invested in his bank’s stock. When the stock took a hit in the market, he lost half of its value. Now this ‘loyal’ employee has to put off retirement for several years to try to make up for the loss.

If you’re one of the lucky ones whose firm matches contributions into company stock dollar for dollar, by all means take full advantage of it. But you don’t have to keep your funds in the company stock forever. Every six months, spread your money into several other baskets to keep your portfolio better balanced.

The third mistake I see concerning 401(k) investments is having the wrong diversification. Maybe you don’t have 100% in bonds, but you still have the majority of the account in them. You may have most of your money in aggressive stock funds. Any time you’re too heavily weighted in one area, it’s a problem.

Proper diversification isn’t that hard to achieve, but there are a few guidelines to remember. While you do need some bond exposure, don’t over do it. Bonds’ record-setting performance of recent years isn’t likely to continue. When it comes to equities, select more than one stock fund. Try to spread your money between funds with stocks in large, mid and small sized companies. And don’t forget to include some international stocks as well.

For the next few years, I recommend those in their 40s put 20% into bonds and 80% into equities. For those in their 50s, 30% to 40% sho

. If you make $50,000 a year, that means the company will put in $1,500 if you put in $1,500. That’s a 100% return!

You should make these contributions even if you think you can’t afford it. Most 401(k) plans allow you to borrow against the balance of your account at a low interest rate. So you get the company match and can still access the money in an emergency. (Plans differ, so check the details.)

The second mistake I see people with 401(k)s make is choosing the wrong investments for that money inside the plan. Perhaps they’re very conservative and afraid of the stock market, so they put 100% of their money in the fixed account or a bond fund. What they don’t realize is that those investments may not grow enough over time to outpace inflation. Sure, the balance may continue to increase, but the money will buy less when they take it out than when they put it in!

Some with the wrong investments have what I call ‘misguided loyalty’. These are the folks who have their entire 401(k) in their company’s stock. Perhaps this started because their contributions were only matched when the money went into company stock. Others might feel pressure to be ‘loyal’ to the company. In their minds, not having all their 401(k) in company stock would be like saying they thought their company was a bad investment.

I met a bank employee who had done just that. His 401(k) was 100% invested in his bank’s stock. When the stock took a hit in the market, he lost half of its value. Now this ‘loyal’ employee has to put off retirement for several years to try to make up for the loss.

If you’re one of the lucky ones whose firm matches contributions into company stock dollar for dollar, by all means take full advantage of it. But you don’t have to keep your funds in the company stock forever. Every six months, spread your money into several other baskets to keep your portfolio better balanced.

The third mistake I see concerning 401(k) investments is having the wrong diversification. Maybe you don’t have 100% in bonds, but you still have the majority of the account in them. You may have most of your money in aggressive stock funds. Any time you’re too heavily weighted in one area, it’s a problem.

Proper diversification isn’t that hard to achieve, but there are a few guidelines to remember. While you do need some bond exposure, don’t over do it. Bonds’ record-setting performance of recent years isn’t likely to continue. When it comes to equities, select more than one stock fund. Try to spread your money between funds with stocks in large, mid and small sized companies. And don’t forget to include some international stocks as well.

For the next few years, I recommend those in their 40s put 20% into bonds and 80% into equities. For those in their 50s, 30% to 40% sh

vestments may not grow enough over time to outpace inflation. Sure, the balance may continue to increase, but the money will buy less when they take it out than when they put it in!

Some with the wrong investments have what I call ‘misguided loyalty’. These are the folks who have their entire 401(k) in their company’s stock. Perhaps this started because their contributions were only matched when the money went into company stock. Others might feel pressure to be ‘loyal’ to the company. In their minds, not having all their 401(k) in company stock would be like saying they thought their company was a bad investment.

I met a bank employee who had done just that. His 401(k) was 100% invested in his bank’s stock. When the stock took a hit in the market, he lost half of its value. Now this ‘loyal’ employee has to put off retirement for several years to try to make up for the loss.

If you’re one of the lucky ones whose firm matches contributions into company stock dollar for dollar, by all means take full advantage of it. But you don’t have to keep your funds in the company stock forever. Every six months, spread your money into several other baskets to keep your portfolio better balanced.

The third mistake I see concerning 401(k) investments is having the wrong diversification. Maybe you don’t have 100% in bonds, but you still have the majority of the account in them. You may have most of your money in aggressive stock funds. Any time you’re too heavily weighted in one area, it’s a problem.

Proper diversification isn’t that hard to achieve, but there are a few guidelines to remember. While you do need some bond exposure, don’t over do it. Bonds’ record-setting performance of recent years isn’t likely to continue. When it comes to equities, select more than one stock fund. Try to spread your money between funds with stocks in large, mid and small sized companies. And don’t forget to include some international stocks as well.

For the next few years, I recommend those in their 40s put 20% into bonds and 80% into equities. For those in their 50s, 30% to 40% sh

in his bank’s stock. When the stock took a hit in the market, he lost half of its value. Now this ‘loyal’ employee has to put off retirement for several years to try to make up for the loss.

If you’re one of the lucky ones whose firm matches contributions into company stock dollar for dollar, by all means take full advantage of it. But you don’t have to keep your funds in the company stock forever. Every six months, spread your money into several other baskets to keep your portfolio better balanced.

The third mistake I see concerning 401(k) investments is having the wrong diversification. Maybe you don’t have 100% in bonds, but you still have the majority of the account in them. You may have most of your money in aggressive stock funds. Any time you’re too heavily weighted in one area, it’s a problem.

Proper diversification isn’t that hard to achieve, but there are a few guidelines to remember. While you do need some bond exposure, don’t over do it. Bonds’ record-setting performance of recent years isn’t likely to continue. When it comes to equities, select more than one stock fund. Try to spread your money between funds with stocks in large, mid and small sized companies. And don’t forget to include some international stocks as well.

For the next few years, I recommend those in their 40s put 20% into bonds and 80% into equities. For those in their 50s, 30% to 40% sh

y have most of your money in aggressive stock funds. Any time you’re too heavily weighted in one area, it’s a problem.

Proper diversification isn’t that hard to achieve, but there are a few guidelines to remember. While you do need some bond exposure, don’t over do it. Bonds’ record-setting performance of recent years isn’t likely to continue. When it comes to equities, select more than one stock fund. Try to spread your money between funds with stocks in large, mid and small sized companies. And don’t forget to include some international stocks as well.

For the next few years, I recommend those in their 40s put 20% into bonds and 80% into equities. For those in their 50s, 30% to 40% should be in bonds with the remainder in equities. For those approaching retirement, remember that you might need to use your nest egg for another 25 years or more. You’ll still need growth, so don’t shortchange the equity side.

401(k) programs have helped millions of workers achieve a higher standard of living through a more secure retirement. By taking full advantage of your 401(k) program and investing your money wisely, you too can achieve your retirement goals.