Quote:OK got a question for all you investment guys. Starting a new job in 2 weeks, shifting from a small company to a big stable company. I'm taking a position with Goodyear as the Service Manager in Fleming Island. Anyways it's a nice little bump in pay but the real reason for the move is the insurance, they offer all the standard insurance we've been doing without while I worked at the mom and pop garage the last 6 years.

 

They also offer a 401k matching program up to 5%, but here's my question. My income isn't really high enough that I worry about "paying" income taxes, I get back more then we pay each year with 4 kids and I'm the only income. So there's no "tax" advantage to storing 5% of my income in a 401k, I do however want to be smart and not leave money on the table. As I understand it, doing a 401k I'm deferring the taxes until I retire, when I take that money out in retirement I'm paying whatever the tax rate is at that time. Now call me a pessimist but I'm pretty sure taxes are only going up. Is it still smart for me to take the money they're offering with the match and just essentially gamble on whatever the future tax rate might be. OR should I pay taxes on the income and invest the 5% on my own post-taxes some other way. If it's option 2 what's the best avenue for small investments?

 

If you're on the younger side of 40, consider a roth.  You pay regular income tax going in (no deductions) but any money the roth makes you can withdraw down the road tax free.  If your company has a 401K  abd your company matches, make sure you contribute and match that part out.  Matching contributions are free money although most companies have vesting periods.

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