When you are day trading on the side and you have a civilian job, one of the great benefits is having a 401K plan. You can have a safe, boring investment vehicle as a backup to your chase for volatility. Day trading is all about the search for volatility in order to make quick profits, but it is nice to have a more stable and secure cache of money to stabilize your financial life.

A 401K is an employer-sponsored retirement plan that can provide you with a lot of return on your pre-tax income. The more you contribute and the earlier you contribute, the more money you will make in the long run. It is so important to be a diversified market player, even if you are a day trader on the hunt for hot stocks day after day.

Day trading can be lucrative, but the gains are not steady. That is why figuring out how to maximize your 401K is a great way to keep a portion of your profits gaining ground in a safe and manageable way.

Take The Match

Generous employers that offer a matching funds level of 50 cents for each dollar that the employee saves are great finds. Always figure out a way to take the highest match possible in your company, because it is free money. It is where you can get as much money as possible into your 401K balance and take advantage of that long-term compound interest.

Stay In For The Benefits

Getting vested in the plan is very important. In some companies, you may not be able to get the matching funds until you have reached a certain number of years of service. If you leave, you might be leaving a bunch of the balance behind. Some companies will give a portion of the match to departing workers, based on a prorated length of service time.

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Get That Tax Break

One of the best things about a 401K is the potential tax break. You can contribute a portion of your pre-tax income that changes depending on your filing status. The max is up around $17,000 per year with different gradations for low-income earners, heads of households, etc.

The 401K is such a valuable investment instrument for creating steady long-term gains and guarding against the volatility of the small-cap market. Many day traders thrive on volatility and make their living on watching stock rise and fall very quickly. Taking their desk job income and diverting it into a 401K is a great way to hedge against an overwhelming amount of fluctuation.

With day trading opportunity in all sorts of markets these days, from fintech to marijuana to life sciences and mineral mining, the chance for real profit is there. But it is also smart to take advantage of more traditional investment vehicles like the 401K to bring your portfolio to a diversified state. It is the way to be financially independent in the long-term, not just for the short-term.

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