Author Topic: Start a new 401(k) or go with a Mutual Fund?  (Read 929 times)

A Guy

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Start a new 401(k) or go with a Mutual Fund?
« on: August 25, 2015, 07:26:20 PM »
Greetings all,
I will be starting a new job in the next month. The employer offers a 401(K) that I can contribute to right away. The employer will not match any contributions because they invest 19% of my yearly salary into a pension fund that I will be vested in after 3 years. I am wondering if I should contribute to the 401 (K) and enjoy the tax deduction of contributions or just start a mutual fund with Vanguard or Betterment and enjoy minimal costs and more freedom to withdraw money as I see fit (as in earlier retirement). What are your thoughts?

WorkingToBeFIREd

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Re: Start a new 401(k) or go with a Mutual Fund?
« Reply #1 on: August 26, 2015, 04:17:24 AM »
Greetings!  Between a 401(k) option and the pension fund, sounds like a sweet gig.

More details may be required on fund offerings within the 401(k) plan, as well as approximate tax bracket.  Shedding taxable income into your 401(k) is always a good thing, but if the funds choices are poor with high expense ratios and your tax bracket is reasonably low, a taxable investment account with Vanguard might be a better option.

I haven't used Betterment, but have been extremely happy with Vanguard for both taxable and retirement accounts.

Good luck!

GGNoob

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Re: Start a new 401(k) or go with a Mutual Fund?
« Reply #2 on: August 26, 2015, 08:00:55 AM »
I would max out an IRA first (Roth or Traditional, your choice and depending on what you qualify for) and then max out the 401k. After those are maxed out, you could contribute to a taxable account. That's just the order I would do it in anyhow.

matchewed

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Re: Start a new 401(k) or go with a Mutual Fund?
« Reply #3 on: August 26, 2015, 08:08:10 AM »
Depending on the specifics the advice may differ but generally it is better to max out your 401(k)