Final answer:
Investing in a 401(k) provides tax benefits, employer matching, and diversification through mutual funds.
Explanation:
Investing in a 401(k) offers several benefits:
- Tax Benefit: Contributions are tax-deferred, meaning you do not pay taxes on the money you contribute until you withdraw it.
- Employer Matching: Some companies will match your contributions, effectively giving you free money towards your retirement.
- Diversification: You can invest your 401(k) funds in mutual funds to diversify your portfolio and potentially increase your returns over time.
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