SWE 2 years of experience at 70k TC. In the past two years I put 8% into 401k with 4% company match which now sits at 20k. Roth IRAs = $0.0 Robinhood (thinking of switch the Schwab) = $20k Cash = 15k Student loans = $0.0! Paid them off this month. I think overall I have done well but can definitely do better. Going forward how should I manage my investments, in your opinion? With the money i have on hand I was thinking of maxing out my 2019 Roth IRA before taxes are due. Also thinking I should probably increase my 401k amount to closer to 15% - or is it smarter to Max out my 401k before considering other investment vehicles?
Overall you are thinking right. Max out your 401k. Then IRA should depend on you savings goals if you can afford to put money there, go for it. With all big players giving commission free trading, there is no reason to stick with Robinhood. It's ok to keep some money in cash, but make sure you have it in some high yourself account or a money market fund.
How should I determine my savings goal?
Nop, you should do 401k up to the match and in your case roth ira. Maxing the 401k only if you max your roth, because the tax break you'll get from the 401k is minimal.
Max out your 2019 and 2020 Roth, then you can consider increasing your 401k. Move your stuff out of Robinhood and use a real broker, like TD Ameritrade (was Schwab). Learn and read about investing, then go to town with your Roth.
One of the things I was confused about is whether Roth or 401k is better for me. Why do you suggest Roth over 401k?
Roth because you will end up being in a higher tax bracket later on in life. So pay taxes at a lower rate today and withdraw tax free later.
In this order Max 2019 and 2020 roth Contribute up to 401k match Build a 3 month emergency fund Pay off credit cards Pay off student loans Max out 401k
Credit card interest rates are usually 20+ percents. If you have credit card debt, focus on that one first.
No no no no. 1. Build one paycheck emergency fund. 2. Pay off credit card revolving balance. 3. Contribute to 401k up to the matched amount. 4. Max out Roth. The contribution can be withdrawn anytime, so it can act as an emergency fund. 5. Max out 401k. 6. Max out HSA. 7. Pay down student loan.
Could someone simply explain the difference between 401k, roth, IRA, and after-tax? Anything found using google confuses more than explain.
At least one other person said this but correct way of doing this is 1) 401k up to amount you get max match 2) max Roth 3) max 401k 4) research options when you make it this far
Is putting so much into 401k worth it if I can't touch it until retirement?
That's kind of the point, the reason it's called a retirement account.
TC or GTFO But really knowing your annual salary will help this question. IRA's have income limits
At the top! I'm still in range for IRAs