Does your company's 401(k) plan makes your eyes glaze over? Is it full of a baffling array of aggressive growth, bond, gold, emerging growth, international, value, and money market funds? Don't ignore it -- 401(k) plans aren't as complex as they may appear. Here are some tips:

  • Begin participating in your company's plan as soon as possible, contributing as much as you can. It not only builds your nest egg, but also reduces your taxable income.

  • Keep emergency money separate. Invest only what you don't expect to need for at least five years. (Note: There's a penalty on most withdrawals before age 59 1/2.)

  • If your employer matches your contributions to any degree, take full advantage of the available matching -- it's free money.

  • Stocks might be scary, but over the long run, they perform best -- by far. Unfortunately, more than two-thirds of 401(k) money is in low-yielding bond or money market funds, where it grows very slowly.

  • If you like investing in individual stocks, 401(k) plans will probably leave you disappointed. Even shares of the largest companies, such as Verizon (NYSE:VZ), Johnson & Johnson (NYSE:JNJ), and Texas Instruments (NYSE:TXN), will probably be off-limits to you inside your 401(k). But it's far more likely that you'll have a good stock mutual fund as an option. Your best stock-fund bet is probably a stock market index fund (such as one tracking the S&P 500 or the "total market"), which usually outperforms most other mutual funds, and has lower annual fees to boot. If your 401(k) plan doesn't include such a fund as an option, urge your payroll professional add one. Every 401(k) plan in the nation should include a stock market index fund.

  • Leave your money in the plan for as long as possible. This delays the ultimate tax bite and permits maximum growth. Don't borrow from your account unless it's an emergency. Taking advantage of your 401(k) means you shouldn't end up having to rely on government programs like Social Security.

Make your life happier by building more wealth and financial comfort for yourself. Our Rule Your Retirement newsletter, for example, offers a lot of guidance to help you set yourself up for a comfy and enjoyable retirement, as well as specific investment recommendations. Try it for free and see for yourself -- it's easy to read and readable in a single sitting.

Longtime Fool contributor Selena Maranjian owns shares of Johnson & Johnson, an Income Investor recommendation. The Fool has a disclosure policy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.