l currently work for a large corporate company that offers a 401K plan. l have no idea what this really means, but l am investing 1% of my pay. l decided to change it to 5% because l have only gotten about 25 dollars l invested and the company gave me 16 dollars? What does all of this mean? is 5% too high too invest? Will l loose this money once l stop working there? l plan on being with the company for about another year.

401k.org, among other sites, tells you how these plans work.

A 401K is a retirement fund. That money placed in that fund is usually invested in mutual funds. The average over the last century is that mutual funds increase about 6-8% every year. This means that money placed in a 401K & left there for the 30+ years of an average person work career have the potential to earn a lot of money. Often into the million + dollars.

Sounds like ur company matches what u put in. If that is the case, then ALWAYS put in the maximum amount they will match. It is free money that they r giving you.

If u leave a company, u have the option to do a ''roll over''. That means u can move that money from their 401K to a ''private'' account where it continues to grow. When u take a new job, that money can be ''rolled'' into their 401K & continues to grow. OR u can keep it in ur own account. You do NOT lose the money if u leave the company. It goes with you.

The number one way that 401Ks make money is by paying earnings on the previous earnings, that were paid on the previous earnings. So the LONGER the money is in the account, the more it is worth. It is called ''compounding'' the money.

So the smartest thing u can do is put money into that acoount at an early age, when u do not yet have a house payment, two cars, utilties, kids, colleges etc. & can afford it more. Then let that money set for 30 to 40 years, & in will changes from hundreds of dollars to 100s of thousands of dollars. But only if it has the time.