re: How much of an emergency fund do I really need?

quote:

---

As I understand it, the difference is in taxable events that occur after the initial contribution, not the initial one.

You'll see the difference 10-20 years down the road more than you will in the short term.


It doesn't get an initial head start because it is taxed on the back end.

10000 Gross taxed account at 25%

10000 taxed to 7500, grows annually for 10 years at 8% to 16,191

10000 tax deferred grows to 21,589, taxed at 25% to 16,191


There are big benefits to a 401k, but the idea that taxable investments have to play catchup to the pretax investments isn't one.

---