I’m 26, and I just started a new job making $50,000. I’ve also been offered a 401(k) with no match. Should I put money into the 401(k) or open a high-yield CD?
I’ve got another idea. I’d open a Roth IRA with good growth stock mutual funds inside and fund it up to $5,500 a year. Make sure these mutual funds have been open at least five years—preferably 10 years or more—and have performed well. Mathematically, this investment, growing tax-free, will be superior to a non-matching 401(k).
Then, if you want to invest more than $5,500, you could put some additional money into the 401(k) offered by your company. Again, make sure you’re invested in good growth stock mutual funds with long, successful track records.
Congratulations, Crystal. And good luck!
* Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.