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My priorities are; 1. Matched 401K Contributions 2. Roth IRA 3. Unmatched 401K 4. Vanguard S&P 500 in a taxable account.
Is there a reason why you would chose the order of 1, 2, 3 and not 1, 3, 2?
Index funds tend to be fairly tax efficient, and thus that's where I've got the bulk of my taxable money. Plus I don't have the time to do my own research on individual stocks, or the faith in my ability - even if I had the time.

Another piece of info:
If you had a fund that traded all the time, you'd have to pay taxes each year, and mostly at the regular income (higher) rate. If you had a fund that NEVER traded, and whose stocks didn't pay dividends, you would buy in and not pay any taxes until you sold. It would be like a non-deductible pay taxes on the contribution money in the year it's earned, but defer taxes on the gains. HOWEVER, with an IRA (deductible or not), you pay the regular income tax rate on withdrawls*. By just investing in an index fund, which doesn't trade much, when you do withdraw money, it will be taxed at the lower capital gains rate!

1. If everybody sells like crazy, the index fund may have to sell appreciated stock and incur gains. That's what happened to some funds that lost money last year, but the holders had to pay taxes on realized gains.
2. You have to pay taxes on the dividends each year, even if you reinvest 'em. Right now, though, the major indices aren't at a very high dividend rate.

*For a non-deductible IRA, you don't pay taxes on the contribution money that was already taxed, just the gains.

Bottom Line: Holding index funds outside tax-advantaged accounts is a GREAT idea, tax-wise.
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