No. of Recommendations: 1
For me, it goes as follows:

1. First fund the 401(k) and other like plans to the point where you no longer receive matching funds;

2. $2000 into a Roth IRA (and $2000 for a spouse, if any);

3. Determine your needs before you can touch your 401k/IRA savings without penalty, and fund a taxable account in tax-efficient investments for that amount per year. (Remember that if we retire early, we need a nice taxable nest egg, too);

4. Then continue funding the 401(k) plan up to the limit.

Many people have the mentality that you should always max out your tax-deferred investments first. If you know you won't retire until you're 60+, that's okay -- but for the rest of us it's important to have a fairly large chunk of change in fully taxable investment accounts, too.

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