Investing Priorities
The general rule of thumb for investing priorities is:
- Invest in your company 401(k) plan up to the match
- Pay off short-term, non-tax-deductible debt (e.g., credit card, car loan)
- Establish an emergency fund; 6-12 months of living expenses is a good guidepost
- Put the maximum allowable amount in a Roth IRA (if eligible)
- Put the maximum allowable amount in your company 401(k)
- Invest the remainder in taxable accounts
- Pay down tax-deductible debt (e.g., home mortgage)
Source: Vanguard