No. of Recommendations: 0
First question is do you have the entire $10,000 right now and do not expect any more for the next three years or will you have an average of $3300 per year for the next three years?

Depending if your income situation allows you to take the tax credit for a Roth deduction (my wife and I took a $400 credit on 2003 taxes), that coupled with the fact that the Roth grows tax free and you get no "free money" from the 401k for the next two years leads me to recommend this:


$3000 in the Roth
$7000 in a separate trading account


$3000 in the Roth
$4000 in the separate account


$3000 in the Roth
remainder in 401k or trading account

This depends on what company you work for and what their 401k plan is. If you come out better in taxes and return on investment from contributing to the 401k even without the matching funds, do the 401k. If your company has a paltry return on its 401k investment options, you might be able to do better managing your initial $7000 yourself even with the tax savings.

I don't get matching funds for my 401k and my tax savings is less than the returns I get from managing the money myself.

Regardless, max the Roth every year.

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.