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I have budgeted $10,000/year for long-term investments.
My company has a 401(k) but does not match contributions.
My 401(k) has an index fund: Vanguard Index 500.

I can't decide if I should put all my $10K into the
401(k) or just a portion, with the rest going into a
Roth IRA. As I see it:

1) $10K into a 401(k) maximizes my deductions BUT does
not give me flexibility to purchase stocks

2) Roth IRAs allow me the flexibility of purchasing
stocks but do not provide me with the tax deduction.
Also, gains are tax-free.

Is there something that I am missing? Is there a
deciding factor? I am currently leaning towards a
split(60/40)in favor of the 401(k).

The Roth is the number one investment choice ( I assume you are young.)

In thinking about the 401k you might be taxed at 28% on all withdrawls. In a taxable account the tax at withdrawl time will be 20% (capital gain rate).

The question is, are the up front tax savings on the 401k large enough to offset the higher taxes at the end. This is what you have to through into the mix to answer your question.

Also, will you need any of the 401k money before you retire? What is the size of your emergency fund? Might want to conside reducing part of the 401k and going for a taxable account.

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