What Do I Invest In After Maxing Out My 401(k)?
Listen to how ordinary people built extraordinary wealth—and how you can too. You’ll learn how millionaires live on less than they make, avoid debt, invest, are disciplined and responsible! Featuring hosts from the Ramsey Network: Dave Ramsey, Ken Coleman, Christy Wright, Rachel Cruze, Anthony ONeal and John Delony….(read more)
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What Do I Invest In After Maxing Out My 401(k)?
Maxing out your 401(k) contributions is an impressive milestone and demonstrates your commitment to saving for retirement. However, it is essential to continue investing wisely even after you have reached this financial goal. Here are some investment options to consider once you have maxed out your 401(k):
1. Individual Retirement Accounts (IRA): If you have contributed the maximum amount to your 401(k), you may want to explore opening and contributing to an IRA. Just like a 401(k), there are traditional and Roth IRA options available. Choose based on your needs, tax situation, and retirement goals. IRAs offer tax advantages and a range of investment options, including stocks, bonds, and mutual funds.
2. Taxable brokerage account: A taxable brokerage account is another avenue to invest funds after maxing out your 401(k). Unlike retirement accounts, funds invested in a taxable brokerage account are not subject to early withdrawal penalties. However, any gains or dividends may be subject to taxable events. This account gives you the freedom to invest in a wide range of assets, including stocks, bonds, exchange-traded funds (ETFs), and more.
3. Real estate: Investing in real estate can be an excellent way to diversify your portfolio and generate a passive income stream. You can explore various options, such as purchasing rental properties, real estate investment trusts (REITs), or real estate crowdfunding platforms. Real estate investments tend to be long-term ventures, allowing you to potentially generate regular income and benefit from property value appreciation.
4. Stock market investments: After maxing out your 401(k), you may consider investing in individual stocks. While stock investing can be more volatile and risky, it also offers the potential for higher returns. Carefully research and analyze companies before investing, and consider diversifying your portfolio to limit risk. Another option is to invest in low-cost index funds that track the performance of a specific market index.
5. Education savings plans: If you have children or plan to have them in the future, investing in their education is crucial. Consider starting a 529 college savings plan or a Coverdell Education Savings Account (ESA). These plans offer tax advantages, allowing your investments to grow over time. By starting early, you can take advantage of compounding returns and potentially ease the financial burden of future education expenses.
6. Start a side business or invest in startups: If you have a passion or an entrepreneurial spirit, consider starting a side business or investing in startups. Starting a business can be an exciting adventure that brings both financial and personal rewards. Alternatively, you can research and invest in startups that align with your interests and expertise. This allows you to support innovative ventures while potentially earning substantial returns on your investment.
Regardless of your investment choice, remember to assess your risk tolerance and diversify your portfolio. Investments carry inherent risks, and diversification can help mitigate those risks. Consult with a financial advisor to determine the investment options that align with your goals, time horizon, and risk tolerance.
Maxing out your 401(k) contributions is a significant accomplishment, but it is not the end of your investment journey. By exploring these additional investment options, you can continue to grow your wealth and work towards achieving your long-term financial goals.
1:25 Very important. This is what Dave does after tax deferred accounts are maxed out, using low/no load mutual funds with low turnover ratio within that mutual fund.
Don't overlook your HSA as well. Immediate tax relief, sets money aside for healthcare, and can be used for non health care costs at a certain point.
You should never buy mutual funds in a regular brokerage account, buy ETF’s way more tax efficient.
Invest in yourself!
I'm a big fan of the bogle 3 fund portfolio
Buy low cost index funds and stop paying for the mutual fund mangers Porsche. Actively managed funds underperformed the s&p index 80% of the time.
This is basically where I'm at. Maxed out 401k and Roth IRA (I do not have an HSA), and now I'm contributing money into a brokerage account in order to save up to do a real estate deal. Don't know how long that will take, but that's the goal (all company bonuses, etc. will go into this account…so hoping it adds up pretty quick).
Say you has 500GRAND in an s@p index fund, it averages about 10% a year dosent it? If you could just take out that 50k a year and live off that you'd always have that principle amount of 500GRAND.
Live off the eggs not kill the golden goose that lays them
Dave's assuming we want to be landlords by buying real estate which comes with it's own set of headaches and drama (= your time). Stick w mutual funds, ETFs and good individual stocks to boost returns unless you want to be changing out toilets every weekend or paying someone else to. No thanks.
Bitcoin.
VTI
Dave. Just say Index Funds in a Brokerage account
Crypto
Employ any diversification strategy and keep going. Most people pay more attention to the shiniest positions on the graph over a proper diversification. Diversify your funds or get a pro help. After my portfolio performance smashed over $180k returns from the last quarter, I have learned why experienced traders make enormous returns from the seemingly unknown markets.
Bitcoin
Wish this video would have been longer. No millionaire interview??
Tell him to see if hid company allows the steps required to do a MEGA backdoor Roth… you can put another ~$30,000/yr into your roth ira with it!
I'm currently in baby step 6 and am on pace to be in baby step 7 in a few months. At which time, I will be in a similar position to the caller. I will have 2 choices – max out the 401k or "max out" the taxable account. (Note: I will still max out the Roth IRA and contribute the minimum in the 401k to obtain the full company match in either scenario). The reason I'm considering the taxable account is so that I will have the option of retiring earlier than 59 and a half. If you plan on retiring after that, then I agree 100% with Dave's recommendation.
Bitcoin and ethereum
I like ETFs and stocks over mutual funds in a non-retirement account, but to each their own. Can't wait to one day be in the same boat as Nathaniel!
Dave probably maxes out a
1) Roth 401(K)
2) HSA
3) Roth IRA
4) SEP
5) Buying up all the land in Tennessee
Real estate!
Roth IRA the Brokerage
ETFs effectively have no turnover, so you only pay for dividends…usually qualified dividends, too, so you pay long-term capital gains tax rates. Those are better for taxable accounts than mutual funds (except Vanguard mutual funds, which do some patented wizardry to avoid taxable events when selling assets within).
Paying taxes in kind of wrong. If the fund drops stocks, you would still have to pay taxes on it. Even if you didn't sell.
He didn't do the baby steps. I've been saying the people can be debt free without the baby steps. And his cult followers always say you can't.