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My $.02:
1. You do not need a professional to take care of the basics. Don’t pay someone to tell you to pay off your credit cards. That’s like paying a doctor to tell you to lose weight.
2. If your employment is stable enough, max out contribution to your 401k (whatever max means to you), *even* if it means taking on other short term debt like car loans. If you have $1000 and get it in the market at ~8%, you’ll make $80 this year. Adding $1000 to your car loan at 3% only costs $30, so you come out at +$50 for the year. Just putting the $1000 in the car loan would save you the $30 but you missed out on the opportunity to make $80. Tack on company matches (aka free money) and the potential tax advantage (I say potential, because as others pointed out, we really don’t know how 401k withdrawals will be taxed in the future), and it is a no brainer.
3. Only engage a professional once you have enough cash flow to invest a meaningful amount beyond the 401k max contribution ($20,500 for 2022). Until then, just stick 100% into the lowest fee option within your 401k (likely index or target date funds) and invest your *time* in something besides retirement planning.
1. You do not need a professional to take care of the basics. Don’t pay someone to tell you to pay off your credit cards. That’s like paying a doctor to tell you to lose weight.
2. If your employment is stable enough, max out contribution to your 401k (whatever max means to you), *even* if it means taking on other short term debt like car loans. If you have $1000 and get it in the market at ~8%, you’ll make $80 this year. Adding $1000 to your car loan at 3% only costs $30, so you come out at +$50 for the year. Just putting the $1000 in the car loan would save you the $30 but you missed out on the opportunity to make $80. Tack on company matches (aka free money) and the potential tax advantage (I say potential, because as others pointed out, we really don’t know how 401k withdrawals will be taxed in the future), and it is a no brainer.
3. Only engage a professional once you have enough cash flow to invest a meaningful amount beyond the 401k max contribution ($20,500 for 2022). Until then, just stick 100% into the lowest fee option within your 401k (likely index or target date funds) and invest your *time* in something besides retirement planning.
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