Somebody put me in my place...

I am 24 years old. I contribute to my 401K up to my employer match. However, I prefer to apply the rest of my savings to a taxable account. I could apply the maximum $17,500 to my 401K, but I put it in all in taxable Vanguard account instead.

My line of thinking is that I want to have the freedom to use that money for ventures before I reach 59 1/2, and I don't plan on retiring any later than 45. How wrong am I?

As Arebelspy said taxes matter. So I'll make some assumptions you are in the 28% tax bracket today, you will be in the 28% tax bracket when you retire in 21 years at 45 and capital gains will still be taxed at 15%.. (Obviously the odds are excellent I'll be wrong about tax brackets in 21 years).

You have $10K in pre tax money to invest.

Option 1 401K. broad index funds with .2% expense ratio. Expected market return over 21+ year 9%/year

9%-.2%=8.8% compounded for 21 years grows 587.8% *$10,000 = $58,777. You withdraw that at age 45 and pay 28% tax leaving you $42,319

Option 2 Vanguard total stock market expected return 9%.

The expense ratio of VTI is less .05% but you will have to pay 15% tax on the 2% dividends you receive each year. So the expected return after taxes and expenses

9% -.05 -.3%= 8.65% grows 571%

You pay the 28% tax upfront leaving you only $7,200 to invest *571% = $41,110

You sell it at age 45 and owe taxes on the profit $41,110 - ~$11,000 ($7200+ reinvested dividends and capital gains) = $30,110* 15= $4,515

leaving you with $41,110 - $4,515 taxes = $36,595 or 15% less money.

If you are in a lower tax bracket at retirement say 15% than it is even a bigger win.

TL:Dr cause you hate math. Maxing out your 401K you gives you more money (today) to benefit from the magic of compound interest.

But you should fill in your own numbers to prove it to yourself.