24m with $3200 monthly income after tax.
Rent is $1200 monthly
Car paid off but expensive to maintain and will likely die soon so currently saving for a new one.
About $1300 in Gas/Groceries and discretionary spending
I was not taught much about financial literacy growing up and feel behind as far as my savings and my retirement.
I just began contributing $700 monthly to a HYSA and mess around with an individual brokerage account with about 1k spread (up about 19% overall) across a few stocks.
I do not currently contribute to a Roth IRA or 401k (new job but 5% match)
Unsure what a smart move would be moving forward and would appreciate some guidance.
Roth IRA, HYSA, or Individual Brokerage Account?
byu/Happy_Profession4532 inpersonalfinance
Posted by Happy_Profession4532
7 Comments
Follow the [Prime Directive](https://www.reddit.com/r/personalfinance/wiki/commontopics). Taxable investing is near the bottom of the steps.
Try to max your Roth; then brokerage
Old you will be thankful
Make a separate “new car” cash savings fund
Start here: https://www.reddit.com/r/personalfinance/wiki/commontopics.
The financial order of operations is to:
1. Contribute to your company retirement plan (401k) up to the match
2. Max out your health savings account (HSA) – if available
3. Max out your individual retirement account (IRA)
4. Max out your company retirement plan
5. Contribute to a taxable brokerage account
You want to fill up those buckets until you are saving at least 15% of your income for retirement: [https://www.fidelity.com/viewpoints/retirement/how-much-money-should-I-save](https://www.fidelity.com/viewpoints/retirement/how-much-money-should-I-save)
Invest in broad market, low cost index funds: [https://www.bogleheads.org/wiki/Three-fund_portfolio](https://www.bogleheads.org/wiki/Three-fund_portfolio)
Use a reputable, low cost broker such as Fidelity, Schwab, or Vanguard.
You will want to balance your financial goals (replacing your car etc) with your financial must haves (retirement, emergency fund). Check out the wiki for more.
an IRA, Roth IRA & 401k; are all types or retirement accts. once you put money into those you cannot withdrawal it without penalties until you are age 62 (there are some exceptions like 1st time homebuyer down payment and medical emergencies).
a HYSA; is just a normal savings acct that gives you a higher interest rate then your local bank, at any time you can take out that money just like a normal checking or savings acct.
a brokerage acct; is an acct that you use for investing in stocks & mutual funds outside of a retirement acct., at any time you could sell those stocks, to buy other stocks, or take the cash money out to use/spend, however any profits those stocks made would be considered income on your taxes, & you would owe capital gains taxes on the profit (usually at a lower tax rate then regular income taxes).
the great thing about a Roth IRA is that any money/interest made inside that acct is completely tax free, however you are limited to how much you can put into a Roth IRA each year (i think $7k for 2026). but if you can put that 7k into a Roth each year, by the time you retire it could be worth millions of dollars and be completely tax free.
think about your money in your brokerage acct, you said its up 19%, when you sell those stocks, you will owe income taxes (called capital gains taxes) on the profit made from those stocks, if that money was in a Roth IRA you wouldn’t owe any taxes on the profit, however because its a Retirement acct you wouldn’t be able to withdrawal the cash to spend until you are 62 years old. there are benefits and drawbacks from both even though they both often involve investing your money in stocks and mutual funds.
if your employer offers you a 401k match, that’s free money they are offering you. make sure you take advantage of that (assuming you have extra money each month to do so and are not living paycheck to paycheck). find out how much you need to contribute to the 401k to max out the companies 401k match. but be aware that money is in a retirement acct so you wont be able to spend it until you are age 62 without penalties except as noted in the top paragraph.
personally you should contribute to the 401k enough that you max out the companies 401k match amount (talk to HR if you don’t know how to do that, or what that amount is) & additionally max out your Roth IRA contribution each year. while those are both retirement accts so you wont be accessing that money until you are 62, your retired self will thank you.
> About $1300 in Gas/Groceries and discretionary spending
Break this out further. This is so you can have a full picture of your monthly spend and can build a budget you can stick to.
At minimum, it looks like you have $700 leftover each month for saving. First, contribute to your 401k to get the full employer match at minimum. Then focus on building a 3-6 month emergency fund in a HYSA. Then, any extra should go into a Roth IRA. You should use up the investment space in tax advantaged accounts like 401k, Roth IRA, and HSA before investing in an individual brokerage account.
I think some of the advice here is skipping over a very important fact-you are planning on buying a new car in the near future. Knowing that, I would prioritize HYSA contributions for the time being. That way you have money to buy a car when you need it.
Beyond that, a 401k match is free money. Sign up for the 5% to get the match asap. That is free money.
That will decrease how much you put in the HYSA, but that is okay because it is free money.
You are not in a position right now to do a Roth. Emergency savings and 401k are more important. You are likely a couple of years away from taxable brokerage making sense. Taxable brokerage is for people who have some emergency savings and their retirement on track.