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how to invest from your 401k

Reading time: 4min read

4 questions you need to answer before you invest your retirement money

(and why you shouldn’t wait to start investing) 

401k investments

You took the money quiz and opened your retirement accounts for the first time in foreveeeer – YAY!  

And you confirmed there’s a good chunk of money in there. Picking up dust.
Cuz no, it’s not invested. Or maybe it is? How do you know?

We’ll cover the 4 questions you need to answer to start investing your retirement money – including what to look for, where to start, and why you really do need to pay attention to this now if you want future-you to make real bank. 

1. What counts as a retirement account?

They are savings accounts meant for 60-ish-year-old-you.

The most common are 401k, IRA and Roth IRA, which have awesome government tax benefits.

Remembering account names can be hard because, tbh, they make no sense. They’re assigned after the tax codes that brought them about. 

Easy tip to remember? 

  • An IRA was set up by you – remember the I in IRA as “I did this!”
  • Accounts that start with 4 – 401k, 403b, 457, etc. – are set up 4 you, by your employer.

Fortunately, you don’t need to memorize this to start investing, so we’re gonna skip to the good stuff. ;)

2. How do you know your account’s reallllly invested?

Look out for words like SPAXX, money market funds, and treasury. 

Spaxx or money market funds are mutual funds that invest solely in cash (AKA no different than money sitting in your savings account, but as a low-risk investment). And thus, not *actually* invested. U-ho.

One of the biggest mistakes people make is assuming your money will be auto-magically invested once it’s in a retirement account. It’s not. You gotta set it up if you want that auto-magic to happen. 

Good news? 

Once you invest, it’s a set-it-and-forget-it kind of deal. (Or don’t forget it – it’s fun to see how much your money grows while you’re out living your life!)

More good news? 

Investing doesn’t take as long as you think it does. Most accounts take less than 15min to open. We only think it takes forever because it’s something most of us never learned about growing up.

Penny’s 101 Investing course is less than an 1 hour long start to finish. Even if you’re the type who reaaaally likes to study your options before you take action, you can set future-you for success and abundance in less than a day. 

And no, you won’t need to check the stock market everyday like that other finance guru told you.

3. Which is better? 401k or IRA? Roth or Regular?

Short Answer: We don’t care. Pick one and do ittt.

If your employer set up a 401k account 4 you, start there.
If you need to open your own IRA account, pick one and go! 

The main difference between most retirement accounts comes down to: either you pay less taxes today (Traditional IRA / 401k) or less taxes later (Roth IRA).

Generally speaking, you can’t go wrong with either.

We hate making blanket recommendations that aren’t personalized to your financial situation, so we created a money quiz just for you!

Take our Roth versus Regular quiz to get your answer once and for all.

4. How much? Doesn’t matter. Start ASAP!

Start early, even if you start small.

Can't pay your bills? Fine. Literally start with $50. 

We'd rather you save zero money and put a little bit towards your retirement, than have thousands saved up with nothing for 60-year-old you. 


THAT’s how much we believe in investing – and how important it is for future you. 

When it comes to investing, time is your #1 best friend. The earlier you start, the longer you allow your little cash to snowball into LOTS of cash for future you. 

When you invest, the average returns are 7%. If you start with $3K per year (that’s $300/month) when you’re 22, you could have $750,000 at 65.

Think about that for a sec. You just hit 6-figures and you barely had to move a finger. The only moves you had to make? A few clicks to open your account, set up auto-transfers, invest, and watch your money grow. Literally. It’s that easy. 

(And yes, you can save, invest, AND enjoy your life today. We’re not giving up our mani-pedis, neither should you.)

PS. Not sure if you own a retirement account yet?

If your bank statement just says your name on it and / or you can withdraw money without any *major* warnings that you are about to “distribute” or incur a tax bill – then it isn’t a retirement account. 

Want to learn how to set one up the easy way? Sign up with Penny and get access to a tailored financial plan. We’ll walk you through it step by step. 

Looking for the Roth or Regular quiz? No need to scroll up, click here.

Join the convo on Instagram @startwithapenny

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