There are lots of retirement plans out there for any interested individual. Nowadays, it would be prudent for one to check every available option's advantages and disadvantages. Individuals must also carefully select which plans work for them based on their finances, needs and future plans. Aside from participant deposits, a typical retirement fund grows by earning compounding interest over the years. However, there are some that put funds into investments like stocks, bonds and real estate. Some plans like the 401k uses funds for more costly but higher yielding investments. It is not uncommon for individuals to use the 401k to fund a business venture of their choosing.
A 401k is typically employer sponsored. Employers usually match employee contributions up to a certain percentage of their total incomes. Like similar retirement plans, contributions to a 401k account are not taxed. Earnings from interest gains and profits from business ventures are also not taxed. This does not mean that the 401k is virtually a tool for tax exemption. The funds in the account are taxed normally upon distribution once the recipient hits retirement. A 401k plan is a great source of capital. It is a combination of the participant's and the employer's matching contributions. And since these contributions and their potential earnings are not taxed until after the funds are withdrawn, a very healthy lump of cash is accumulated. It would be a waste to let this money just sit there doing nothing but earn interest. Why not use a 401k to fund a business venture.
Some people may be content with their retirement funds just earning interest and accumulating contributions. For some people though, they want more out of their plans. Everyone wants to retire with healthy finances but there are certain individuals who would like to retire in style. The chance to do the things they have never done before retiring is a very attractive notion for most people. Why live out your retirement in the suburbs when you can have a house in the Bahamas? This is the reason why you should use your 401k to fund a business venture. The profits you can potentially make through a properly managed business is greater than the compounded interest your account will ever earn just sitting there.
Finding a good business to invest in is no problem. There is no shortage of brands offering franchise rights and small start up ventures looking for funding. One type of business that has grown in popularity recently is the "green" kind. Everyone is so concerned about the environment and the future of the world and its resources. People want products and services that are environment friendly. Businesses catering to these demands will unlikely suffer a lack of patronage. Many of these green ventures, although very profitable, require very low start-up capital. If you are not that interested in using your 401k to fund a business that is environment conscious, you can try other tried and tested businesses. You could buy a franchise instead. Some reliable brands are offering franchise rights. Investing in one of these is not as risky as other enterprises since these brands are already tried and tested. You can even buy franchises from the numerous fortune 500 companies offering them. Don't let your money go to waste. Check out the endless choices for investment opportunities for your retirement fund.
No comments:
Post a Comment