Your 401(k) is not an all or nothing bet. It is an important investment in your future, a tool to enhance your golden years. So, for goodness sake, don’t just let it ride.

More often than not, I find, individuals roll the dice on their future by ignoring their biggest asset. 

Be honest, when it’s time to sign up or change the investment allocations in your plan, how much effort do you make?

A securities analyst colleague just told me he spent 13 seconds making his investment selections. How much research do you do?

My colleague claims his friends just ask their parents, or him, which investments to select. Many individuals choose investments they know very little about. A pigeon move if ever there was one.

Since 401(k) assets represent 10% of U.S. households’ total financial assets as of the second quarter of 2019, they should command a commensurate amount of your focus. Company websites provide a significant amount of information to participants. Designate an evening to review and discuss with a spouse, a friend or your adviser. 

And because 401(k)s enjoy many attributes that enhance the growth of your nest egg, let’s review the benefits:

Dollar-cost averaging ensures that you will continue to buy into markets when they decline, a habit that is difficult to employ as an individual investor but occurs naturally with your 401(k) payroll contribution. Consistently putting money to work in the markets enhances total return over time.

The Investment Company Institute, a fund-advocacy group, reported that 4.6% of 401(k) participants stopped putting money in the market during the first half of 2009, just when they should have been staying put or increasing their contributions. (The bear market bottomed in March of 2009.) And a 2016 study by financial research firm Dalbar found the average equity fund investor had an annualized return of 3.66% for the previous 30 years compared with 10.35% for the Standard & Poor’s 500 index. Dalbar research shows that same average investor staying in equity mutual funds for 3.46 years. Hopping in and out of investments truncates your total return. 

While gainfully employed – continue to contribute during up markets and especially in down markets. And give your investment selections a reasonable period to perform before pulling the plug.

AB Insurance Services compared the growth of a taxable investment versus a tax-deferred investment over 30 years. With an initial investment of $100,000 compounding at 8% annually (analogous to the average return for stocks over the last 120 years of approximately 9%) and assuming an income tax rate of 33%, the tax-free investment grows to $1,006,266 versus $478,931 for the investment subject to taxes. 

That means you should stash as much money as you possibly can into your 401(k).

Employer matching. Think of this as free money – a jackpot – you would be silly to ignore.

If your employer pays a dollar for dollar match you will effectively double the value of your 401(k) balance over time. You can’t receive the match if you don’t participate in your 401(k).

Once you select the allocation of your 401(k) assets, review them every six months or even annually. The exception to this rule would be if you have a material, life-changing event. But for the most part, the research shows that taking a long-term, patient approach is best. 

This will increase your odds of beating the house over the long term. And that, after all, is the surest way to retire in comfort with a whale of a jackpot.