Should I invest in a 401(K) or Roth IRA? I would contribute first to a 401(k) plan that is sponsored by your work. The reason being is so that you can take advantage of a employer match. For example, if your employer matches a contribution at 6%, they have basically given you free money. If your salary is $50,000.00, and you have 6% of your salary taken out of your pay check to contribute to the 401(K), and your employer matches 6%, for a given year, your employer has given you $3,000.00 of free money.
If you have money that you can save for retirement after you have invested in a 401(K) up to the employer match, it might be a good idea to put it in a Roth IRA. With a Roth IRA, your money will grow tax-free until you reach the retirement age of 59 1/2.
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