Investing Fundamentals

To Roth or Not to Roth?

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  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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