5 Must-Knows About Your 401(k)

With the nation's financial markets in turmoil, many are wondering what it means for their retirement funds. In a piece of good news, the Treasury Department announced Monday that it will guarantee the money invested in money market funds before Sept. 19th.

"Good Morning America" contributor Mellody Hobson tells you the five things you need to know about your 401(k) during these difficult financial times.

Your Money Is Safe

As you know, I am a big believer in the 401(k) plan. For most of us, it's the first and best place to invest, no matter how the current stock market is performing. Typically, your employer takes an equal percentage from each paycheck and invests it directly into your 401(k) plan. And with the market down, one of my favorite market factors comes into play — that of dollar cost averaging.

Dollar cost averaging is the approach to investing a set dollar amount over a specific period of time, which allows you to buy more stock when prices are low and less when prices are high. At the end of the day, the price balances out and you are able to take advantage of both the upside and downside of the market -- a terrific opportunity in a market like we are seeing lately.

 

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