Investing Fundamentals

To Roth or Not to Roth? That is the Question

Table of Contents
  1. Show Notes
Table of Contents  
  1. Show Notes

In this episode, we answer another listener question about whether he should invest in a Traditional 401k, a Roth 401k, or both.

If you’re employed, chances are your employer offers a 401k. Normally, this would be a Traditional 401k, but check with HR to see if they offer both a Traditional and a Roth.

401ks allow you to invest your pre-taxed income, and sometimes employers will match up to a certain percent. If they do, take it — it’s free money. However, Traditional 401ks have a yearly limit as to what you can invest. Therefore, some employers will also offer a Roth 401k which allows you to invest after-taxed money from your check — there is also a limit too.

If you can afford to max out both, go for it. If not, go with a Traditional 401k, and anything over the limit to which you can invest, through that in the Roth — hopefully your employer will do some matching there too.

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Show Notes

Health Savings Account (HSA) — This is a savings account you can open to use for health-related costs.

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