I'm 23 years old and just finished my Master's degree in Biomedical Engineering about a year ago. I live in an expensive area by myself, and am currently able to save $500 a month in my savings account, and about 6k a year with company matching in my 401k. I also get a 4k bonus (after taxes) each year, so that's 10k a year in the savings account and 6k a year in the 401k. I started this job with nearly no savings (I currently have 10k in my savings account right now). I wanted to establish some accessible funds for an emergency before I started investing.
I am on track to get a promotion in September that would increase my salary by about 5k. This would give me extra money to put elsewhere. I am currently maxing out the "company matching" 401k plan - I can only contribute a max of 6% of my salary, but I can also start contributing to a Roth IRA which sounds like a good idea. I have also heard about ETFs on Vanguard.
For my age, does it make more sense to contribute to the Roth IRA when I have the extra cash to do it? This way I will have both the 401k and Roth IRA to grow for retirement. I did a projection on my 401k, and with an annual rate of return of 7%, and average salary increase of 3%, that barely exceeds 1 million dollars by the time I'm 55. That's a lot of money, but certainly not enough to retire on. I think it would be smart to have another source of growth - whether that be a Roth IRA or ETFs or both at some point.
Submitted March 10, 2019 at 11:30AM by newengineer1995 https://ift.tt/2SVtdMa
