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Start contributing now to whatever point your employer matches.
Build your emergency savings, then max out your 401k.
Agreed with VP1 - emergency savings first because you never know what’s gonna happen, then max our that 401k. And kudos to you for being on top of this stuff as a recent grad!!!!
Makes sense, thank you!!
start now if you can. It’s all about compound and the earlier you start the better.
Start now, absolutely. It’s so important to start saving earlier because your savings compound.
More time in the market is better. Plus if you go the traditional route it lowers your taxable income.
The typical advice is pre-tax 401k up to company match. Then max Roth IRA ($6000 after tax) then put extra into 401k.
Kinda hard to math it out, but my method is pick a percentage for your 401k contribution and calculate your final pay check and how much you'd be earning each month.
Then see if that's enough monthly take home pay where you could also contribute $500 to a Roth IRA ($6000 max over 12 months). Repeat till you find a number for take home pay for your saving/expenses you're comfortable with.
D2 in case you didn't know they upped 401k to 19,000 and IRA to 6,000 this year.
Try to build up a 3 month emergency fund to cover expenses and contribute up to your employer match in you 401K. Once you got the emergency fund then evaluate your options and either up your 401K contributions or open an IRA. If you have debt then pay that down ASAP, but look at the interest rates vs expected returns to compare roi for paying debt vs investing. Check out the boggleheads forum for more info, lots of great stuff from the late founder of Vanguard.
The order I suggest for recent grads is max your employer contribution first, ESPP depending on your company, six months emergency savings, then either loans or increasing 401k (until you hit $19k) depending on your interest rate
You said a loan against your 401k, not personal loan. There is a clear distinction between the two. You can even Google this believe it or not, creditkarma.com gives a detailed explanation of a 401k loan.
budget yourself and youll be fine, 19k/yr and you’ll thank yourself later down the road
max it out
A Traditional 401K is a necessity for long-term savings, but millennials seem to think it is the only investment tool that matters.
Considering taxes are at historically low rates (for better or for worse), you will end up paying high taxes on future returns for 401K distributions. I’d suggest choosing to pay tax now, and then invest after-tax money into a ROTH IRA or ROTH 401K since you don’t lay taxes on gains.
Thus, I recommend making the MINIMUM contribution necessary to MAXIMIZE the amount of money KPMG will match. So if KPMG will match up the 6%, then put in 6% and then invest elsewhere with your remaining money