Do you believe in 401k?
While 401k portfolio seems quite good, but taking money out means paying interest and tax. How does this compare to go straight to stock? I understand the latter option is post tax money (or roth deferral in 401k). If you do 401k, how much percentage of your income?
Contribute enough to max out your employers match. Then contribute remaining, up to max allowable, in your choice of IRA/Roth.
Why use an IRA vs 401k? Also many engineers make too much to contribute to Roth (ignoring backdoor contribution)
Don't ignore backdoor Roth.
You are misinformed my friend. Google roth ladder conversion. Also look into mad fientist website
Have both pretax and post tax retirement (Roth) plans. 50/50 until this year to have options on which bucket I pull from when retired. Dumping all of it into Roth now because my employer matches those contributions into 401k bucket, like the flexibility of being able to withdraw contribution without penalty, don't know when I'll die/retire/income level at retirement.
Why roth? Isn’t pre tax much better?
For reasons stated above I don't do pretax now. It's the way you think about buckets of money and future income when retired and when you retire. If I retire with no additional income at 40, I won't be able to tap my 401k without penalty if I need it. While I can do so with my Roth contribution. People have set up Roth ladders for this. Saving on tax now vs later doesn't matter much if you set up income sources in retirement at same level as you are making now. You do get the tax free growth, but not the lower tax bracket as a person with little income would get. future income tax rate is anyone's guess. I value flexibility more in case I need money. I hate the idea of having a penalty on withdrawing money until I'm 65-70. Some companies can do megabackdoor Roth, so you can get both. I'm mostly 50/50 because I like having options. Realistically, if you're a person that is maxing out retirement this extent, you're way ahead of the game than most. This is just optimizing 1-2% 30 years down the road.
I believe in 401k company match
It’s an absolute no brainer. Just contribute the max $18.5k/yr even if your company doesn’t match. Tax deferred compounding is a massive advantage. You’re not paying interest to take distributions if you wait until you retire and your tax rate should be way lower then than it is now. Not to mention you compound on the larger pre tax amount for x years.
It is not an absolute no brainer as the person here put it. If you think that there is no other investment you are planning to make in near future and you are happy with index funds ans is yes. You are young and can take risks having liquidity can be a big asset. So 401k might not be the best bet. While it is conventional wisdom to invest in 401k it might not be for everyone.
Agree with kssssssh. Anything "conventional" is not going to make your money or "rich" perhaps. If you're young, you can take greater risks. I don't contribute to 401k but generate 30%+ annual returns on all my savings (consistently for more than 4.5 years). 401k will not give you that.