New Employer: No matching on 401K; Fund 401K or funnel into mortgage?

[lukebuz]

So, let's say my employer doesn't match 401K contributions for the first year (part of getting vested in the company).  If I usually put 15% of my income into my 401K, should I continue to put the 15% in there with no match, or would it pay off to stick the 15% (less after taxes, of course) to my mortgage at 3.75%?
After the first year, I'd put the 15% back into 401K when i'm eligible for matching...

[dandarc]

What are the investment options in the 401K?  Are you in a high or low tax bracket?

A 401K usually has to be very bad to justify skipping it.  Even if you're not using a 401K, the math says keep your low, fixed rate mortgage as long as possible and invest as much as you can in higher yielding investments.

That being said, I'm personally paying off our mortgage early.  However, we're not doing that until all of our tax advantaged accounts (Solo 401K, 457, 2 Roth IRAs) are maxed for the year.  We also are fully aware this is a sub-optimal decision from a mathematical perspective, and are doing it anyway for peace of mind, particularly with my wife's upcoming career change possibly meaning we'll be a 1 income household for a couple years in the near future.

[KungfuRabbit]

Need more info.

If you are low tax bracket and no match a 401k is nothing special though 

[jmusic]

We also are fully aware this is a sub-optimal decision from a mathematical perspective...

I disagree.  You're comparing a "risk free" investment against an investment that bears risk.  The marginal return from market investments are not guaranteed, or even knowable at the time of investment.  Not the same as comparing two cans of soup at the grocery store...

[TheAnonOne]

My company does not match 401k investments either, AND the investment options are not the best.

However, I am in a higher tax bracket (33%) so saving 33% of 18k isn't a bad deal. (It's more than that after state tax... which is somewhere between 6 and 9 percent)


If you are only making ~40~ or less thousand and are in the 15% bracket, you are still saving 15% + state tax but you won't get quite as much benefit like I do.

That being said, your mortgage is only 3.75, do you have any higher % debt you can go after first? If not, I still lean to investing.