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Investing Options
Posted on 6/22/14 at 6:38 pm
Posted on 6/22/14 at 6:38 pm
I have a 401k that gets 3% from the company no matter what I do and also an HSA through work. Here's my question: Should I max out the contribution to the 401k and HSA each year? Or should I open a different retirement vehicle to give to since my company will give 3% no matter what? Advice is appreciate!
1
Posted on 6/22/14 at 8:23 pm to 1860pissed
Whew - for a while there I thought you wanted advice on "investing" call and put options.
The 401 and HSA are good choices but if you have other options what are they?
The 401 and HSA are good choices but if you have other options what are they?
Posted on 6/22/14 at 8:39 pm to foshizzle
I don't have any other options at the moment. But should I max both of those out before I do anything else?
Posted on 6/22/14 at 8:49 pm to 1860pissed
The usual recommendation is to start by investing enough in your 401 that you get the maximum company match possible. It is free money, after all.
Do something similar with your HSA - snag the biggest company match you can but no more than that. An HSA is basically like a traditional IRA that you can pull from for medical expenses, but really it is better to just stash the money and pay out of pocket if you can.
Also contribute to a Roth and max it, if possible. Don't worry about a "rainy day" fund yet b/c you can withdraw your Roth contributions at any time without penalty. This does not apply to a traditional IRA, of course - only a Roth.
Once you are maxing the Roth, switch back to the 401(k) until you max that. And at that point you're maxing everything anyway, so it's time to start taking vacations and enjoying life. Or you can build a separate rainy day fund to avoid pulling from your Roth but really by this time you will have the cash flow (or a HELOC) to not worry much about it.
Do something similar with your HSA - snag the biggest company match you can but no more than that. An HSA is basically like a traditional IRA that you can pull from for medical expenses, but really it is better to just stash the money and pay out of pocket if you can.
Also contribute to a Roth and max it, if possible. Don't worry about a "rainy day" fund yet b/c you can withdraw your Roth contributions at any time without penalty. This does not apply to a traditional IRA, of course - only a Roth.
Once you are maxing the Roth, switch back to the 401(k) until you max that. And at that point you're maxing everything anyway, so it's time to start taking vacations and enjoying life. Or you can build a separate rainy day fund to avoid pulling from your Roth but really by this time you will have the cash flow (or a HELOC) to not worry much about it.
Posted on 6/23/14 at 8:37 am to foshizzle
Thanks foshizzle. My company is contributing to my 401k and HSA even if I contribute nothing. I think I'll open a Roth IRA and max that out first then go back and max the other 2 out 
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