I'm 21 year old and i'm putting 16K( including match) into my 401K per year. It this a good idea ? See below

Also i'm have been managing the funds myself the past few years, and my anual returns have been aroung 10%. Do you think i should not max out and mabey put some money in a presonal brokerage account vs. retirement account. ?

Is that before or after you include the funds having not been taxed?

Max out the 401 K before any other savings if it is being matched in anyway by the company.

You can still onen a Roth IRA

Maxing out is not a bad thing, by the time you retire, you should have a nice hefty investment waiting for you.

You might want to look at real estate but what you doing is great for retirement just make sure you have enough reserves in the bank for curent and short term issiues. The time value of money will allow you to retire early and you have a great head start.

Due to the tax benefit, you ALWAYS MAX OUT your 401K before you start investing money elsewhere.

This assumes you are fairly sure you won't need the money before you retire. Most people won't, though.

.

As long as you have money in your savings to cover about 6 months worth of living expenses you are in good shape and will have plenty of money for retirement.

Wow! Good for you! If you keep maxing out then you should be able to retire with a nice chunk of change. You are still young in terms of retirement age so taking some of that money and investing elsewhere is not a bad idea.

Always a good idea but the part I worry about is you managing it. I am not questioning you but there are many blend age appropriatte funds now that help to protect you. The purpose of the 401K is to let it grow and not worry about it. If you can afford to keep that up, start trading individual stocks even if it is tiny, if you have the gift then you can grow that and have your 401k money to retire comfortably either way.

Heck yes!
Go for it. I'm 48 and wish I had done that at 21.
Sadly I blew my $$ on girls and parties in those bachelor years.
At 21, add a Roth account to your bucket. Got extra cash left over that you don't want to tie up? see https://www.fnbodirect.com/01d/html/en/i...
6% saving w/ no minimum.

I think it is great that you are doing this much early. I would either see a planner, or use an online calculator to see where you are relative to your financial goals, if you continue in that pattern.

If you are way ahead of the game, there is nothing wrong with slowing down a little and enjoy more of today... remember, life is short...


I personally advise people to allocate funds along tax vehicles in this order.

1. Take the match in your 401k.
2. Fill up your Roth IRA.
3. Put remaining funds in your 401k.

You obviously need to look at steps 1 & 3 and make a guesstimate for the year, since you have to decide ahead of time what needs to come out of your paycheck each month.

The reason I like this strategy, is that it diversifies your tax consequences.

When you get to retirement, especially if you continue to do a good job saving, it will be nice to have the flexibility to decide whether or not you want to take a taxable or non-taxable distribution from year to year.

The years where your tax bracket is higher, you will want to take a tax-free distribution from your Roth... the years where it is lower, you'll want to take a taxable distribution from your 401k / traditional IRA.

Hope that helps!

Ken Clark
Certified Financial Planner

That's awesome! I know people in there 50's who don't have a dime for retirment because they think they are still too young to worry about retirement. Think about opening a Roth IRA along with your 401k. Max both of those out before you open a personal brokerage account.