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Thanks for the responses. I am already contributing the max to my Roth so I am interested in the comparison of additional moneys to the 401k vs a taxable account. I just want to make sure my quick spreadsheet analysis is sound.

So clearly pretax 401K is preferable to LTBH investing

To test this out is this a reasonable set of facts to use in a spreadsheet to compare:

If I assume (all numbers are assumptions) for one year that I put an additional $5000 in my 401k. That would net me $1250 less in taxes (based on 25% bracket). In two years time this grows by 20% to an account value of $6000. If I were to withdraw this amount of money at the same 25% tax rate I would have taxes of $1500 and a net of $4500.

If I contributed the same NET moneys ($5000-$1250=$3750) to a taxable account and saw the same two year LTBH growth of 20% I would have an account value of $4500 ($3750+$750). If I take all the proceeds the $750 is taxable at long term rates of 15% (tax=$112.50) which nets me $4387.50.

The 401k does seem like the better investment. Unless I am missing something in my thought process.

Is this analysis sound?

Thank you,

Wayne
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