The Easiest 100% Return You Can Get for Your Retirement

Too many people don't take full advantage of employer-sponsored retirement plans. Here's why you should.

Mar 29, 2014 at 1:15PM


Man, that really was easy! Photo credit: Wang Shein

If your job has a benefit package, you may be eligible to participate in some sort of employer-sponsored retirement plan where your employer will match your contributions up to a certain amount.

There are all kinds of reasons why people don't fully participate in these. Maybe you think you can pick investments which will perform better. Maybe you don't like being limited to the selection of funds your employer offers. Whatever the reason, get over it! Here's why full participation in a 401(k) is almost always a good idea.

Employer match
According to one survey, almost 90% of companies that offer a 401(k) plan provide some kind of match of employees' contributions up to a certain percentage of their salary (6% seems to be the norm). Of these, 68% match at least half of the employees' contribution, and 10% match 100% or more. With some companies, the matching percentage depends on longevity – in other words, those who have been with the company the longest get a more generous match.

Don't let your ego take your free money
One of the most common reasons for not participating in a company-sponsored retirement plan is the lack of investment choices. Generally, employers offer a handful of funds to choose from, and participants can allocate their money among them. Many investors feel they would be better off taking that 6% of their salary, opening a brokerage account, and investing it into whatever stocks, funds, or bonds they see fit.

While you may indeed be able to achieve better returns on your own, don't think for a minute you can consistently beat the returns of index funds plus your employer's contributions. The odds are simply not in your favor

Consider an example
Let's just say the index funds offered by your employer average an annual return of about 8% per year, and that by picking your own stocks you can achieve 10% gains each year. This is pretty optimistic to assume you can beat the market consistently, but let's just say you can do it. We'll assume you invest the maximum of 6% of your salary each year for a 30 year career and you start out making $50,000 per year and get a 3% raise each year.

As you can see from the chart, the employer-matched plans outperformed the independent investor handily. Now, this is not an exact science and investment results vary from year to year, but the point here is it is very difficult to consistently outperform whatever index funds your employer's plan offers by a wide enough margin to make up for the matching contribution.

A 401(k) match is like free money, or better yet, a bonus from your employer. It's an instant return on your investment of 50%, 100%, or more. All you need to do is take it.

Where to stick that extra investment cash
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers