s it wiser to open a Roth IRA instead at this stage? Do I need both the 401K and the IRA? Are there significant tax advantages for a young investor? I understand the importance of compounding interest and starting early, but with the limited funds that I have to invest, I want to get the most from it. Is it more important to get involved with a Roth IRA, or begin a portfolio of stocks?If you can, do both. Do the Roth before you do non tax sheltered investimg.An advantage of the 401k is that it comes out of your pay check each week. You have no opportunity to spend it. This can be more important than the tax savings to people who can not save.When you retire the money from the 401k will be taxed just as your salary is now. The money from the ROTH will not be taxed. The money from non tax sheltered investments will be taxed at capital gain rates.
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