So I already have a 401k that is broadly diversified. It’s in US index funds, international stocks, bonds, real estate, etc. It gotten a lifetime rate of return around 8% since its inception. I get a 100% match up to six percent and I put in a little more than that (7%). I started it when I was in my early 20s and now that I’m mid thirties it has a healthy balance albeit I’m not maxing out contributions, only slightly more than enough to get my full match.
I also take advantage of my company stock purchase plan and get a 15% match up to a certain dollar amount. I just started doing this within the past year.
I do have an emergency fund. It could be larger but has two months of expenses saved up.
I thought about opening up an individual brokerage account (like Robinhood or Fidelity) to start a third investment. For two reasons:
1. It allow me to access the money sooner than 59 and a half if I were to ever need/want to. So travel, home repairs, supplement possible early retirement etc. However it wouldn’t be unless I really needed to access it.
2. I could pick stocks/index funds I really want to invest in, or avoid those I don’t want. My 401k does invest minorly in oil companies and Tesla. I prefer to avoid these if at all possible and could either pick several companies I like (Microsoft, Apple, Google, NVDA, etc.) and invest in them. Hoping tech might outperform my more diversified 401k.
It wouldn’t be a lot of money a month. I’d continue to add to my HYSA emergency fund more, but throw some spare money (say $50-$100 a month) at a brokerage account just to see what happens? Or am I better off just putting the money in my 401k due to the tax advantage? Currently the bulk of my 401k is in a pretax account but I have a small (and growing) portion in a Roth 401k.
My ultimate goal is to build wealth, but I’d like flexibility as well.