If you're investing money for the long term, the first vehicle to consider is your workplace retirement account, provided your employer offers a, says Sabatier, who is a millionaire and an early retiree. "The No. 1 thing is to invest enough to get the 401 match," he says. "That's 100% free money. If they match 50% of your contribution, that's a 50% return."
Once you've put in enough to get the match, the next place to look is a Roth IRA, if you qualify to make contributions. "Then max out yourNamely, tax-free growth. Unlike traditional IRAs and 401s, Roth accounts are funded with money you've already paid taxes on. That means your contributions can't be deducted from your taxable income.
Because they're designed to help low- and middle-income families get a leg up on retirement savings, Roths come with relatively low maximum annual contributions — in 2022,under the age of 50. Depending on your income, the maximum may be less for you, or you may be barred from contributing altogether.
Once you've contributed as much as you can to a Roth, "go back to your 401 and max that out," Sabatier says. As noted above, money that you contribute to a 401 account can be deducted from your taxable income for the year you invested it. Plus, investing in a 401 defers your taxes, meaning you won't owe tax on any earnings or dividends from your investments until you begin withdrawing the money.takes some doing — individuals under 50 can contribute up to $20,500 in 2022.
MakeIt