When To Invest in Your 401k, Roth IRA, HSA, and Taxable Investment Account

I've received so many questions on how to invest your money. Specifically, which order to invest your money. With options like an IRA, 401k, HSA, real estate, taxable investment accounts, and many more, it can be tough to figure out when you should be investing in each one.
In this video, I wanted to make the whole process easier for you. Step by step I walk you through when you should think about investing in each account. This is a simple guide that will help you understand the "why" behind each step so you can feel confident with your investing decisions.
HSA Investing video: • The TRUTH About an HSA...
Roth IRA Investing video: • $800,000 Roth IRA Star...
Fundrise Investing video: • Does Fundrise Real Est...
Car investing video: • My Secret Car Investin...
Check Out My Recommendations (It helps support the channel):
🔥 M1 FINANCE Investing- Free $10 (once you deposit at least $100 within 30 days) bit.ly/427KBBn
📚 Here's a video on how to use M1 Finance • M1 Finance Investing T...
📝 NewRetirement - The retirement planning tool I personally use to make sure I'm on track with saving for retirement. It's perfect for "Do it yourself" investors bit.ly/3EAAhrJ
🔒 AURA - 14 day free trial to see if your personal information has been leaked online and have it removed aura.com/jarrad
📝 Empower - Free Net Worth Tracker bit.ly/3NUNtwq
📧 Business Inquiries: [e-mail]
YOU'LL FIND THESE PLAYLISTS HELPFUL:
🏆 Financial Independence Retire Early Playlist: bit.ly/2PO7RCa
💸 Side Hustle Playlist To Help You Make More Money: bit.ly/32cu3J1
💵 All Things Investing Playlist: bit.ly/2NExPFT
📈 M1 Finance Playlist: bit.ly/2NBLeOU
📕 Learn How To Budget Playlist: bit.ly/2ps5LgT
📲 Follow me on Instagram: bit.ly/2vazxXf
Affiliate Disclaimer: Some of the above may affiliate links. Support the channel by signing up or purchasing through those links at no additional cost to you. I appreciate you for helping me keep this channel running
Disclaimer: This video is for entertainment purposes only. Everyone's situation is different so do your own research before making any decisions with your money. If you need help then contact a Certified Financial Fiduciary before trying anything that is mentioned in this video. I prefer a Fiduciary financial advisor that charges an hourly fee as opposed to an ongoing fee based on a % of your portfolio. Always remember that incentives determine the type of advice they give you so one that charges an hourly fee is less likely to be problematic.
#Investing #financialindependence # #HowTo

[@JarradMorrow]

Check Out My Recommendations (and help support the channel): 💰 M1 FINANCE - Invest In Fractional Shares For Free (where I invest my Roth IRA) m1finance.8bxp97.net/eX16D ---------- 🏠 FUNDRISE - Start Investing In Real Estate The Easy Way! (I have money invested here) bit.ly/FundriseJM ---------- 💎 WEBULL - Free Stock Investing Platform (Get 2 FREE stocks worth up to $1400 when you deposit $100 upon opening your account) bit.ly/WeBullJM ---------- 📈 BLOOOM - FREE 401k and IRA Fee Analyzer. Are your 401k and IRA fees too high? bit.ly/BloomJM ---------- 💵 ROBINHOOD - Free Investing Platform (FREE stock worth up to $200 when you open an account and fund it) bit.ly/RobinhoodJM1

[@crossbronxkennels]

I'm trying to understand the maximums here. The internet gives me a different answer when I search can my accountant does. I'm not totally getting it. It sounds like you contribute the max to your 401k that the year allows and contrary to the max to your Roth IRA. So last year I think the max I could contribute to my 401k was 22500 and I believe the Roth IRA was 6,500. Can you do both of those for a grand total of 29000? Also I want to say that I have garnered so much guidance from your videos. I appreciate what you do very much and I have forwarded many of them to friends and family that need to hear these messages as well. Keep doing what you do. It is greatly appreciated.

[@juancarlosmontes]

It's so easy to open an IRA. I called up Vanguard yesterday and they walked me through the process and stayed with me on the phone until it was completely done and I opened my Roth with just $50. And they were extremely nice and extremely patient.

[@JarradMorrow]

Great point. They're super helpful!

[@checkedoff]

Shouldn't it be "Jarrad with two A's"? Nice video, BTW.

[@Trezn]

im high asl and i checked back in @0:12 and i was like wait what

[@lonewolfadventures0187]

Another great one, Jarrad. Keep them coming!

[@JarradMorrow]

Thanks, Paul!

[@mrsnepples2565]

Another great video Jarrad! Keep them coming!

[@JarradMorrow]

Thank you!

[@DrsGanandMo]

great analogy with the dishwasher !!! very cool

[@JarradMorrow]

Thanks!

[@thehumbleoutliers-investin1454]

Really good ideas in this video! Good reminder to diversify yourself.

[@JarradMorrow]

Thanks. Yes, diversification is so important.

[@Tym0mang]

It’s honestly a shame how this channel doesn’t get more views. This is GREAT information that every person should take advantage of. Thanks Jarrard!!!

[@JarradMorrow]

Thanks. The KZbin gods must not like me haha.

[@ruthroylance414]

@@JarradMorrow totally agree with ForgotMyName. If I were single I would totally change my name to Vanguard for you :D

[@AKATTP]

Great videos. The way you explain the topics is easier to understand than lots of other channels on here.

[@JarradMorrow]

I appreciate that!

[@Chris-ut5ih]

So you’re investing in a taxable account for a future real estate purchase? I’m unsure if I should use a HYSA or invest index funds for a home down payment

[@joshlonon2614]

Criminally underrated channel. Thanks for the information! Very helpful!

[@derricksr25]

What does a taxable account work

[@akin242002]

It's a tough decision choosing between emergency fund or 401k/IRA to start first. I also decided to do both.

[@JarradMorrow]

I know, right?!?! That's why I decided to do a little bit of both. I hadn't been investing that much for so long that I was ready to get more money in the market while also being smart about building up my EF.

[@Heatherly42]

Thanks!

[@JarradMorrow]

You bet!

[@itsjuststeve9655]

This is VERY good info. I was writing these steps on Post It notes but a KZbin video is easier to keep/share. This information is mandatory knowledge before your 1st real job. Imagine being 18 - 23 with this setup and 30 - 40 years of contributions and growth. If you can set this up as payroll deductions it would be even easier to do.

[@JarradMorrow]

Thanks!

[@jerrycamonjr.9594]

I notice a lot of KZbinrs says the same thing but how can someone that’s making 50k annually contribute to all of those accounts? Ain’t no way

[@JarradMorrow]

I can't speak for others, but I never said anything about someone being able to max out all of the accounts on $50k per year. I agree it would be nearly impossible to do on that sort of income.

[@MRZEROTOINFINITY]

Roth IRA FTW! Hulk Smash 👍

[@JarradMorrow]

Thanks, duuuude! 👍🏻

[@wanderingtin]

I came here for HSA and staying for more info about financial freedom! I should have done this a long time ago!

[@ruthroylance414]

I've watched several "order of operations" videos on this topic and I agree with yours the most. Would you be willing to create a video on saving for your future house/rental property? Is it going to be similar to your future car fund? Thanks!

[@ryanyost5241]

Loving the video man...What kind of account are you using to save up for your rental property?

[@JarradMorrow]

Thanks! I'm using a high yield online savings account.

[@NbaLive4ever]

Dude...one of the best videos I’ve seen on this topic in a while. Thanks Jarrad!! Also, I have like just under 60k in student loan debt. Should I mainly focus on that before actually doing any of these?

[@JarradMorrow]

Wow, thanks! What's your interest rate on them?

[@NbaLive4ever]

Jarrad Morrow no problem! And it’s split up into 20 diff groups with rates varying from 4.5% to 6.8% each 😅 I’m currently under an income based plan

[@JarradMorrow]

I had the same thing with my student loans. They ranged from 5%-9%. I always say that anything above 4% you should really focus on paying those off ASAP. Anything between 3-4% you could invest or pay off the debt. I personally just wanted to get rid of those debts so that's why I put a ton of focus on those first while still investing a little bit here and there.

[@NbaLive4ever]

Jarrad Morrow got it. Thanks for the advice!

[@mikemethe2724]

I love your videos

[@JarradMorrow]

I appreciate it :)

[@EllenIsLovex42]

Information loaded video! Thanks! I'm wondering why a Pre-Tax 401K is more beneficial for those pursuing FIRE?

[@JarradMorrow]

Thanks for the feedback! A traditional 401 because you can do something called a “Roth Conversion”. If you don’t know what that is then you’re in luck because the video I’m releasing tomorrow explains that exact topic.

[@EllenIsLovex42]

@@JarradMorrow Are you unable to do a Roth Conversion if it is a Roth 401K?

[@alrocky]

@@EllenIsLovex42 "Are you unable to do a Roth Conversion if it is a Roth 401K?" If you're contributing to Roth 401(k) there is no need to do a Roth conversion. That money can be transferred to Roth IRA tax free once you leave that employer. . Regardless of whether or no you are pursuing FIRE, if you are in *12%* Federal Tax Bracket (under $40k single, under $81k MFJ) you should favor contributing to Roth 401(k) not traditional 401(k).

[@freeagent6203]

What if my employer doesnt match?

[@JarradMorrow]

Great question. If any of the steps don’t work for your situation then just skip it then move onto the next

[@minihorses]

I love your videos! I always learn from you, so this video sparked a question. I'm maxing out my 401k and HSA, I didn't realize I could also contribute to an IRA in addition to my 401K? Can I do both traditional IRA 6k and Roth IRA 6k or does it need to be either/or?

[@JarradMorrow]

Good questions! Yes, you can contribute to an IRA in addition to a 401k. An IRA is available to everyone while a 401k is only available if your employer offers one to you. No, you can only contribute a total of $6k/year between a traditional IRA and Roth. Which one you choose is going to depend on your current income, what you think your income in retirement will be, what you think the tax rates will be (no one will ever be able to predict this unfortunately but I still wanted to mention it), and whether or not you're pursuing FIRE. I broke down Traditional vs. Roth IRA in a video. This is for someone who plans to retire at the average age: kzbin.info/www/bejne/moipk5WOjb13o68

[@minihorses]

@@JarradMorrow Thank you so much for all of the information! Think I'll open a traditional IRA and then move previous employer 401k to the IRA because the fees are so high. I was planning to move it to my current employer's 401k which is through Merrell Lynch but am reconsidering after watching one of your videos discussing better fees/choices with the IRA. I'll double check my current 401k fees too, kind of want to stay with Merrell w/ IRA to keep it in one spot but will check their fees first. I appreciate your clarification regarding index fund and mutual funds fees too. I'm also working on paying off my house for the piece of mind. Thank you for all of your help, you rock my Buckeye friend! :-)

[@wyattpotter2103]

Hey awesome video man I think you should make a video about ABLE accounts not everyone can use one but I plan on making one soon and putting 5k in it a year and save the rest for my first place to live in. I can't wait to watch your next video have a good night man.

[@JarradMorrow]

Thank you!

[@Vamplord111]

Hey nice video. So I have a strange question as someone who does not have the best track record with jobs and will likely be on disability in the next 10 to 15 years would it still be worth investing in the 401k at the max my employer matches and the hsa as well as invest in an index fund those are the 3 I am most interested in but would it be worth it if my employment is not consistent?

[@smpoinde]

Hi, new subscriber today…… I was wondering if you have any videos on a post tax 86 account. I hired in at a new company that offers one through fidelity. I do all the good things first, HSA, ROTH, 401k , 401k Roth and matches and I was wondering how to take advantage of this after tax feature. If you don’t have a video to share, maybe make one for us please?

[@84dford]

Where would you put your future car fund on this list?

[@JarradMorrow]

I wouldn't put it on this decision tree since it's in a whole different category of saving/investing.

[@nsane4twain]

Could you do a video about the tax benefits of owning your own business?

[@JarradMorrow]

No, not going to make that type of video

[@arcaneknight9799]

Betterment's savings rate dropped from 1.84% to 1.37%

[@JarradMorrow]

I know, it's because the Federal Reserve cut rates. This happened to all savings account so it wasn't just you. I took a hit as well.

[@melodiev9253]

Would you say paying off debt is step 0 or it fits in after investing to the 401K match?

[@JarradMorrow]

Good question. I would say that paying off bad debt would be placed right after a 401k match. I could also be convinced that it may make sense to place it behind an HSA as well.

[@melodiev9253]

Jarrad Morrow Thanks!

[@JarradMorrow]

Absolutely!

[@jmanueke]

Quick question. What should I do if my company does not offer a 401k match? P.S. I’m currently maxing out annual HSA limit

[@JarradMorrow]

I'd personally max out my IRA then invest in my 401k with any additional money I had left over to be invested. Just because they don't offer a 401k match doesn't mean it isn't a good idea to invest in one.

[@phen0mejon99]

My wife has an HSA through her employer. Can I open a 3rd party HSA or because I'm covered under her plan can we only use the one?

[@JarradMorrow]

Great question. You can, but the money will have to be initially contributed to her HSA through her work. Then if you want to transfer the money to that new HSA account then you can. That's what I do right now. My employer uses Health Equity so they deposit my money into that account. Then I transfer the money from my Health Equity account to my Lively account to avoid the fees.

[@medge32]

What's the thought on 401K investing if your employer does not have a dollar-for-dollar match? My employer matches 25% of every dollar I invest. What would be a good amount for Step 2?

[@123ldevane]

My company offers a 401k but doesn't match. Should I switch to a Roth Ira and max it out instead?

[@JarradMorrow]

Yes, absolutely. If you don’t have access to any of these accounts in the order I laid out then skip it and move onto the next.

[@jeremyfree2fish586]

Hey friend how are you getting the benifit of the tripple tax savings if you are paying medical expenses out of pocket and not through the hsa? Also after you retire is the money taxed at the same rate as a 401k would be? If so it seems like a no Brainerd huh

[@JarradMorrow]

Good question. When you pay out of pocked you do pay the taxes, but when you go to reimburse yourself out of the HSA in the future you’re recouping those taxes you had paid. The money you pull from your HSA isn’t taxed at all as long as it’s used for medical expenses. Not positive what the tax rate will be if you withdraw at 65 or older for non medical then the money is taxed as income. If you do it right then it could be a minimal amount.

[@jeremyfree2fish586]

Thank you for responding it would seem then you would want to kinda be mindful of how much you have in there versus your wroth because we don't know at what rate we could be taxed at assuming you will be using it as a retirement plan as well as hsa so maybe to much is a bad thing? I hope this makes sense and thanks again

[@fredswartley9778]

Nice video. What if we don't have enough money to max out an HSA? Should we still invest in the HSA before the ROTH IRA? Doesn't the ROTH IRA give better returns?

[@JarradMorrow]

You're more than welcome to bypass maxing out your HSA to put money into your Roth IRA. The account (HSA or Roth IRA) isn't what gives you a return on your investments, what you invest your money into (stocks, ETF's, etc.) is where your returns are going to come from.

[@fredswartley9778]

@@JarradMorrow Can you choose your investments in an HSA? I mean can you invest in index funds and ETFs in an HSA?

[@JarradMorrow]

As long as the provider offers them. They usually do though so you should be good to go.

[@Justmylukc]

I have an HRA through work so cant open an HSA :(

[@JarradMorrow]

Never heard of an HRA

[@Justmylukc]

@@JarradMorrow Health Reinbursement Account. The employer pays a large part of the deductable.

[@myjourneyinUSA]

Same as my husband. He got HRA too better than nothing

[@TheTricky1151980]

So you are saying that we need to launder our money? :)

[@JarradMorrow]

😂😂😂

[@davidbrooks8809]

Not everyone can start a business..or have the time or knowledge..

[@JarradMorrow]

That’s okay

[@bulcub]

you should put away/add every year to your rainey day fund!! depending on your job you could save 5K or more a year! If you change jobs add more! you would be surprise at possibly having maybe 100k saved up in liquid over 10yrs

[@JarradMorrow]

For most people that's a lot of cash to be sitting around not out there working for you.

[@dlg5485]

I don't believe in letting a bunch of cash sit in an emergency fund when it could be working for you, certainly not 6 mos worth. Why would I hand over 6+ months of cash to a greedy bank so they can make money on it while paying me peanuts? Makes no sense. I keep 1-2 months in a savings account and I've never needed it, so setting aside any more than that would be a huge waste, in my opinion, especially if you have very stable income which I do. Put that money to work for YOU, not for some greedy bank. keep a cash back credit card with grace to supplement in case of emergency if you are that paranoid, just don't use it for any bs.

[@JarradMorrow]

Thanks for sharing your opinion 👍🏻

[@alrocky]

Considering allowing your Roth IRA to double as your Emergency Fund.

[@nelsonhurtado8167]

Gringo thanks for ur hardwork.....adiossss😀😀

[@JarradMorrow]

Hahaha no problem :)

[@davidbrooks8809]

Don't want to be a landlord..lol

[@JarradMorrow]

Nothing wrong with that!

[@okeezmusic8609]

How can someone want financial freedom yet wanna work a steady job for 30 year?

[@JarradMorrow]

Good question

[@erivers71]

Yeah I agreed ; 1) emergency fund 2) traditional bucket within your 401k with match 3) Roth bucket within your 401k or Roth IRA 4) HSA 5) 529 State sponsored college fund.

[@JarradMorrow]

👍🏻

[@alrocky]

If it's tax appropriate for you to "3) Roth bucket within your 401(k), then 2) [should be] *_Roth_* bucket within your 401(k) with match. Roth IRA can double as your Emergency Fund.