How to become a 401(k) millionaire

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so what does it take to have $1,000,000

in your 401k how do you get there our

Karen fireman is over at the plasma with

a new segment that we are calling fast

401k so Tara woman take it away all

right so the very first thing and the

hardest thing really to do is to start

saving as soon as possible

right it doesn't matter whether or not

you have saved up into this point for

the rest of your life today is the very

best day for you to start saving

so don't let not having it done it keep

you from making that same mistake again

so that's the really important thing

that's first the second thing is this is

so important use the company match

companies are allowed to contribute to

your 401 K to up to 3% of your salary

right so this is free money you have to

if you can if you can do this every year

get free money there's no reason you

shouldn't do that so you contribute 6%

or more they will contribute up to 3%

remember this keeps compounding so if

you're really young if you're a

millennial here let's see what you're

you have to decide when are you gonna

need the money up for retirement so

let's say 60 so as Dom said when you're

young you want to have a much more

aggressive composition of your portfolio

you might want to be let's say something

like 8020 stocks to bonds 80 stocks you

consider that riskier but also likely to

have higher returns and you have a

longer time for that to compound and if

it ends up having a drawdown meaning you

lose money you have a lot of time to

make that back this is just sort of a

proxy for what one might do you have to

weigh your own situation and how

aggressive you want to be for me I

always like to be more aggressive not in

the stocks that I pick but in the

composition of the portfolio I would

probably be higher but I'm older than a

millennial so then maybe I would start

to take it down

but the very first thing start saving as

soon as possible and use the match those

are the critical points bkr millennial

here on the desk question give me some

avocado toast I have a question actually

about the particular type so what

exactly is a Roth IRA would you do it

any different is it just for people with

the last name off that's a great

question it is not just for people the

last name Roth the thing about a 401k

like this this is pre-tax dollars that

you put in right

so you don't pay tax on them you put

them in here and in 401k and you when

you take the money out you get taxed a

Roth which actually I prefer you get

taxed the money's tax going in its

after-tax dollars that you use to put in

the Roth IRA however when you take it

out you aren't taxed to me the beauty of

that is I won't know what the tax rate

will be but I'll know that it's not

taxed on the way out so both are great

instruments I happen to have a Roth but

both are great start saving today so

within that stock bucket Karen and I

understand that that stock bucket

adjusts according to your age but within

that bucket does your allocation to

riskier stocks also slide as you get

older for instance I mean if you're a

millennial and you got 80 percent is

most of that 80 percent gonna be paying

stocks for instance you can choose most

places will let you choose you can

choose as aggressive as you want you

could even choose your own company stock

other place you can just say you know

what do it for me I'm sort of not so Pro

risk and they'll do it for you they'll