Financial guru question about 401k

[Throwin Darts]

Taxable investment account? Does that mean you can withdraw at any time at that current tax rate without penalty?

By taxable investment account I mean money that's not part of any retirement account that's tax advantaged. Meaning money outside of IRAs, 401ks, etc.

[captainsling]

Some good advise guys. Keep it coming.

[TKK]

Good advice here. Max 401k matching in the fund. Then get a self directed Roth and Max it out. If you still have money to invest, go back to contributing to your 401k until you hit max allowed by law. After that go to a regular retail brokerage account.



I think he means a regular retail brokerage account. You'll pay capital gains when you close out your position. Less than a year and you'll pay short term capital gains. More than a year and you'll get a tax break with long term capital gains. There is no tax penalty for withdrawing your money.

yes - open a mutual fund account and there are no limits on how much goes in - do a low cost fund like Vanguard or Fideltiy - no penalty on withdrawals - IMO thought the first place is 401k / IRA investments - whether Roth or Traditional -

Never forget this advice ................ tax treatment nor return is the most important aspect of saving. Low taxes and high returns on zero money equals zero.

The real secret is to put money away systematically over many years and leave it alone. ALWAYS save a percentage of income - not a dollar amount. That way every time you get a raise your savings amount increases too. If you save 10-15% of your income over 30-40 years you will be wealthy beyond your dreams

[Froggy]

I have a self directed IRA with Vanguard that has been doing very well for many years. Disclaimer: I'm no financial expert by any means.

I subscribe to The Independent Adviser for Vanguard Investors. Dan Weiner has four different model portfolios he recommends based on your age, risk and future goals.

https://adviseronline.investorplace.com/

[stxhunter]

I too have an IRA with vanguard and have done very well.

If you're finding the 401K offers limited investment flexibility (like most 401k's) why not roll over your investment into an IRA on a site like vanguard? Tons of options and very low fees.

[Atfulldraw]

I too have an IRA with vanguard and have done very well.

If you're finding the 401K offers limited investment flexibility (like most 401k's) why not roll over your investment into an IRA on a site like vanguard? Tons of options and very low fees.

I have one 401k that if I remove any portion of it, in addition to the penalties and taxes, I'll wouldn't be able to work there for 365 days. Their rule applies equally to hardship withdrawals and loans. Basically, I'd have to quit and wait a year to be re-hired.

That's a fairly good reason to keep it right where it is.

[captainsling]

I too have an IRA with vanguard and have done very well.

If you're finding the 401K offers limited investment flexibility (like most 401k's) why not roll over your investment into an IRA on a site like vanguard? Tons of options and very low fees.

It is doing well, and I don't want to lose the match from my employer. Just looking for ways of more return for the future.

[glen]

Roth vs traditional
If you will make more money when retired a Roth all the way. You gotta pay the man it’s just pay him now or later. I know it’s difficult to do now but if you can figure out your current tax bracket and then your retirement tax bracket it would make your choice easy. As far as investment options you should have the same with all

[TKK]

I too have an IRA with vanguard and have done very well.

If you're finding the 401K offers limited investment flexibility (like most 401k's) why not roll over your investment into an IRA on a site like vanguard? Tons of options and very low fees.

True but keep in mind that most employers cover the fees inside a 401k plan where even Vanguard and Fidelty charges fees you will pay even if they are low

[MedicineMan7]

Tagged for later.

[12RingKing]

Whether or not to utilize a traditional vs Roth 401k has more aspects to it than just your tax bracket on retirement. If you need tax savings yearly because of your income level, then the savings today, invested into your traditional IRA (converted to a backdoor Roth) could be a small fortune in 20-30 years.

There’s also another avenue to consider investing tax deferred, HSA. If you are a part of a high deductible medical plan through your employer you can utilize an HSA and invest it for retirement medical expenses.

If you’re interested in investing up to 55,000 a year into tax deferred options check this out:

https://www.madfientist.com/after-tax-contributions/

Some would decide to take after-tax contributions and invest them into other avenues, and I would be inclined to go that route too most of the time. But, it’s just info if you’re interested. It’s options....

[4_Fingers]

Agree with what has been said thus far. Max out tax deferred options and diversify. Also, reinvest the dividends. All of them, all the time and keep plowing them back in. Won't seem like much now, but 20 yrs from now, you'll be amazed. Compounding is the secret sauce to investing in either tax or tax deferred accounts. Someone once asked me if I'd rather have a one time $250,000 in cash or be given 1 penny on day 1 and then double it every day for a month. Take the penny! Also, don't forget about credit. Pay off any and all credit cards every month. Point is, its a long game and you need to stick with it. My 2 cents.

[Daniel75]

Excellent thread, in.