As an Amazon employee, you have access to a wide range of investment options for your 401k through Fidelity. With matching contributions from Amazon and tax-deferred growth, the 401k can be incredibly valuable for retirement savings. However, with so many funds and allocation choices, it can be confusing to know how best to invest your money. This article will provide an overview of the Amazon 401k plan, explain the core investment principles, and offer tips to help you make the most of your retirement plan.
Take Full Advantage of Amazon’s Generous Matching
Amazon provides a very competitive 401k match of 50% up to 4% of your salary. This means that for every $1 you contribute up to 4% of your pay, Amazon contributes an additional $0.50. This is free money that can supercharge your retirement savings. Be sure to contribute at least enough to max out the company match.
Consider Index Funds for Broad Diversification
Index funds like those tracking the S&P 500 provide instant diversification across hundreds of stocks. Compared to picking individual stocks, index funds reduce risks and volatility over the long-term. Fidelity offers several low-cost index funds covering stocks and bonds. These can be excellent core holdings in your 401k.
Don’t Ignore International Stocks
While US stocks make up a significant portion of most 401k plans, international stocks can provide valuable geographic diversification and growth potential. Fidelity’s international index funds provide exposure to developed and emerging markets across the globe.
Rebalance and Adjust Your Asset Allocation Periodically
As you accumulate funds over time, your desired asset allocation percentages can shift. It’s important to rebalance back to your target from time to time. This allows you to sell high and buy low. You’ll also want to adjust your holdings as you age to reduce overall portfolio risk.
Utilize Target Date Funds on ‘Autopilot’
Target date funds offer a hands-off approach by automatically adjusting their asset mix over time. With a single fund that matches your estimated retirement date, your asset allocation becomes more conservative as you near retirement. It’s a simple, low-maintenance way to stay diversified.
The Amazon 401k plan provides exceptional opportunities for employees to save and invest for retirement. By fully utilizing the company match, investing in low-cost index funds, maintaining proper diversification, rebalancing, and adjusting your asset allocation over time, you can put your retirement savings on auto-pilot and accumulate substantial wealth.