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I have not, as of yet, participated in a 401K. My employer will do a 2.5% match, but no more. Should I participate in my 401K?

Yes, you should absolutely participate in your 401K. It's very hard to beat the 100% return you get from the first 2.5% of your income that is matched. As to whether you should invest more, it depends on the 401K. My employer offers really crappy mutual funds with pretty high fees. I invest what it takes to get the match, and all of that goes into a bond fund, but no more. In general, it is best to have bonds and REITs in a tax protected account since they are income earning.

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