Ten Easy Steps to a Successful 401(k)

For the majority of working Americans, the most common vehicle for owning mutual funds is through their employer's retirement plan, but very few people are making the most of this mainstay of retirement planning.
Over the holidays, I had occasion to socialize with a group of very bright, successful people who are saving for retirement. We talked of many things, including their investments. And, sad to say, not one of them could coherently explain what he or she was doing, and why.
Everybody, it seems, wants a quick, easy answer. And for those who are unwilling to take the trouble to figure out what they should be doing, the easy answers usually come from slick sales pitches and superficial media hype about the hottest stocks, funds and managers -- as if successful investing were a popularity contest.
That's the bad news. The good news is that investors can manage their 401(k) plans to make their retirement money work much harder for them.
Lots of people spend at least a dozen hours planning a vacation. I often wonder why so few are willing to spend a dozen hours managing their retirement assets.
The following ten steps to 401(k) success shouldn't take more than a dozen hours. If you're young, they could put an extra $2 million into your retirement fund. Even if this job requires a total of 100 hours, that's a payoff of $20,000 an hour -- for work you can do at home in your spare time.
Let's start with the most basic guideline of all.
Step 1: Be a participant
Contribute as much as you can afford. At the very least, put in as much as necessary to qualify for all the matching money your employer offers. Failing to do that is like turning down a raise in pay.
Step 2: Invest in the right things
This can be the most challenging part of managing your 401(k) plan, depending on the options you have available. But doing this