Most people realize that they should be contributing to a 401(k). However, most people don’t know how to manage their 401(k)s. Here are a few easy rules to keep you on the right track.

• Start saving as early as possible - Time is on your side when it comes to the power of compounding interest. Even in you’re not able to contribute a lot at the start, every little bit helps.
• Location, location, location - When it comes to investing, don’t put all your eggs in one basket. You want a diverse portfolio but don’t overdo it. Three or four funds should suffice.
• Remember Enron - The lesson we all should have learned from that disaster is to limit the amount of funds you have in company stock. As a rule of thumb, don’t hold more than 25% of your portfolio in your company stock.
• Less is more - Resist the urge to constantly tinker with your 401(k). Once you’ve chosen an asset mix, only rebalance your portfolio once a year. Any more than that and you risk chasing yesterday’s winners.
• Cash isn’t always king - If you change jobs, don’t cash out your old 401(k). If you’re happy with your portfolio, leave the 401(k) open with the current administrator. If you’re not happy with it, your best bet is to roll it into an IRA. You will avoid taxes and withdrawal penalties as well as have more options and flexibility.