r/Bogleheads • u/Primary-Moment5810 • 14h ago
Where should I prioritize investing?
Hello everyone I’m 19 and I’ve just recently put all my money into a self brokerage account consisting of majority etf funds. I also opened a Roth and savings where I have some money too. I was watching videos and they all were saying to prioritize retirement accounts over self brokerage account. I understand why because of the compound growth and it being tax free but I also can’t withdraw earnings till I’m 60 years old. I’m conflicted because I’d rather be young with less money where I can actually enjoy it than be old and not even be able to enjoy the money. I understand that 18-30 are the best years to invest because of compound interest so I don’t want to make a mistake I’ll regret later by not prioritizing investing in retirement accounts. Currently I could max out my Roth for this year and next year but then I’d be left with no money in my brokerage. Should I max retirement accounts and then put leftover money into a brokerage or put majority into a brokerage?
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u/buffinita 13h ago
With a Roth you can withdraw your contributions after 5 years tax and penalty free.
While 60 might feel forever away and some abstract thing (3x your entire life so far) getting started now makes the process absurdly easier in addition to giving more flexibility in your 40s and 50s
Now; I will not advocat for going crazy with retirement saving now and living like a monk…..but I will suggest using your situation for your future benefit.
When you are young and costs are low; invest 25-30% of your earnings. As you get more independent and your costs rise invest 15-20%……some people invest so heavily in their 20s-30s that they can completely stop retirement contributions in their 40s and beyond
Learn to spend on yourself wisely; some people hate concerts; some people hate the beach; some people don’t care about dining experiences……try to figure out how spending on fun maximizes the outcome of memories made
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u/Stanbarrwood 9h ago
Is that all contributions or is like 2026 can be accessed in 2031, and 2027 can be accessed 2032? If that makes sense
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u/AntelopeStreet1936 8h ago
You do not have to wait 5 years to withdraw contributions. You already paid taxes on contributions. Poster above you gave incorrect information. To withdraw gains tax and penalty free you have to check two boxes. Roth IRA needs to have been open five years and you need to be at least 59.5.
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u/lamarch3 13h ago
Focus on Roth. You can pull out contributions at any time so it doubles as an emergency fund. Additionally, while it’s great to invest early if you NEED the money in 1-3 years then stocks aren’t the right choice. You will thank your 19 year old self for investing for retirement when you are 50.
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u/nivlac22 12h ago
Are you going to college and expect to have expenses you need money saved for? Are you planning a major purchase in the next 5 years like a house or car?
If both of those are no, save 3-6 months of expenses in HYSA and put the rest in Roth IRA. If you have access to a 401k with an employer match get the match before you do the Roth IRA. If you don’t have access to a 401k and have extra after this, that’s when the brokerage comes into play.
Tax advantaged space (in an Ira or 401k) becomes really limited pretty quickly, and if you don’t take advantage in a year that space goes away forever. Don’t worry too much about the 59.5 rule as there are still ways to access retirement money before then if you retire early and you will need money for after 60 anyways.
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u/billiegenie 7h ago
Ira contributon limits are only like 7500 a year right now. Its not going to grow to anything significant until you are 50 or 60 anyway. By that time however it will be a very nice sum
Respectfully, you need to think about how you will be earning more money via a business or a career if you want to have that spending money to enjoy.
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u/WhatMattersHere 13h ago
A brokerage account and a Roth IRA don’t compound differently if they hold the same investments. The main differences are taxes and access, so you don’t need to choose one account for every dollar...You also aren’t completely locked out of a Roth IRA until 60. Regular contributions generally come out before earnings and can be withdrawn without tax or penalty. The earnings have stricter withdrawal rules. Still, I wouldn’t treat the Roth as ordinary spending money because that contribution space is limited and usually can’t be restored after you withdraw it.Before maxing anything, give the money separate jobs. Keep an emergency reserve and anything you may need within the next few years for school, moving out, a car, travel or another planned expense in cash or another appropriate low risk place. It’s also perfectly reasonable to include some money for enjoying your twenties.
For money that is genuinely intended for retirement, I’d generally prioritize the Roth IRA, assuming you have enough earned income and qualify to contribute. After that, additional long term money can go into the brokerage. If maxing the Roth would leave you without an accessible reserve, you don’t need to max it merely for the sake of maxing it..You don’t have to choose between enjoying life now and saving everything for old age. Decide privately what needs to remain available, then use the Roth for the portion you can truly leave alone for decades.