Investing can feel like putting together a puzzle, but instead of colorful pieces, you’re working with your hard-earned money. The trick is knowing where to put your money first—and why. Let’s break it down into a simple, actionable plan that helps you grow your wealth wisely while minimizing taxes and fees.

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1. Start with Your 401(k): Don’t Miss Out on Free Money

If your employer offers a 401(k) with a matching contribution, that’s your first move. Why? Because it’s essentially free money. When you contribute, your employer matches a portion of it—dollar for dollar, up to a limit. It’s part of your compensation, so don’t leave it on the table.

Pro Tip: Only contribute enough to get the full match. Here’s why:

• Many 401(k) plans charge fees, and over time, those fees can eat into your returns.
• Investment options are often limited and may not align with your goals.
• Withdrawals in retirement are taxed, and tax rates could be higher in the future.

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2. Max Out an HSA: The Triple Tax Advantage

Once you’ve claimed your 401(k) match, turn your attention to a Health Savings Account (HSA). This gem offers triple tax benefits:

• Contributions are pre-tax, reducing your taxable income.
• The money grows tax-free.
• Withdrawals for medical expenses are tax-free.

After age 65, you can even use HSA funds for non-medical expenses. While you’ll pay regular taxes on those withdrawals, it’s still a fantastic option for retirement planning.

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3. Open a Roth IRA: Tax-Free Growth at Its Best

If you’ve maxed out your HSA, move on to a Roth IRA. Here’s why it’s a favorite:

• You pay taxes upfront, but your money grows tax-free, and withdrawals in retirement are completely tax-free.
• You can withdraw your contributions anytime, without penalties—great for flexibility.
• You get access to a wide range of investments like stocks, bonds, mutual funds, and even real estate.
• There’s no age limit for contributions, so you can keep investing even in your 70s and beyond.

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4. Circle Back to Your 401(k): Go Big

If you’ve maxed out your HSA and Roth IRA and still have funds to invest, return to your 401(k) and contribute up to the annual limit ($22,500 in 2024). You’ll enjoy the tax benefits and keep building your retirement nest egg.

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5. Open a Brokerage Account: Invest Without Limits

Got money left after all that? You’re doing great! At this point, open a regular brokerage account. While these accounts don’t have tax benefits, they offer:

• Unlimited contributions.
• Access to a diverse portfolio of low-cost index funds and ETFs.
• Long-term capital gains tax benefits if you hold investments for over a year.

Pro Tip: Set your dividends to automatically reinvest. This allows your money to grow faster through compounding.

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Additional Steps to Financial Success

• Emergency Fund First: Make sure you have 3-6 months of living expenses saved.
• Pay Off High-Interest Debt: Focus on debt with rates higher than your expected investment returns.
• Diversify Wisely: Invest in 4-8 low-cost funds for broad market exposure.

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The Bottom Line

Building wealth takes time, patience, and discipline. Start by securing your 401(k) match, then maximize the potential of HSAs and Roth IRAs before exploring additional options. By following this sequence, you’ll make the most of every dollar while keeping your financial future on track.

Invest smartly, stick to your plan, and watch your wealth grow. Let’s make your money work for you—because you deserve it!