Build Real Wealth

Max your Roth IRA

Maxing your Roth IRA is the single best return on investment in personal finance outside of an employer match. The money grows completely tax-free — no capital gains tax, no tax on dividends, no tax when you withdraw it in retirement. At $7,500/year, the compounding over decades is substantial. This is the first place to direct extra money once your 401(k) match is captured.

1. 1

   Calculate what $7,500/year looks like as a monthly transfer: $625/month. Set up an automatic monthly contribution to your Roth IRA on payday.

2. 2

   If $625/month isn't immediately feasible, contribute whatever you can now and increase it incrementally. Even $200/month is better than $0.

3. 3

   Confirm your contributions are being invested — not sitting in cash. Log in and check that the money is going into your chosen funds, not a default money market account.

4. 4

   Track your annual total. The $7,500 limit (2026 — subject to change annually) is per person, per year. If you're married, your spouse can also contribute $7,500 to their own Roth IRA.

Increase 401(k) beyond the match

Once your Roth IRA is maxed, the 401(k) is the next place to push. Pre-tax contributions reduce your taxable income today — at higher income levels, this starts to matter more than it did earlier in your career. The annual limit is $24,500 in 2026, and most people have significant room between their current contribution and the max. Closing that gap is how tax-advantaged space gets fully utilized.

1. 1

   Log into your HR portal and check your current contribution rate and dollar amount per paycheck. Calculate how far you are from $24,500/year.

2. 2

   Increase your contribution rate by 1–2% now. Do it again in six months. Small, consistent increases are easier to absorb than one large jump.

3. 3

   If you get a raise, direct a portion of it directly to your 401(k) before it hits your checking account. You won't miss what you never see.

4. 4

   Note: if your plan offers both traditional and Roth 401(k) options, the Roth 401(k) is often still the better call if you're in a moderate tax bracket and expect to be in a higher one in retirement. See Stage 5 for the reasoning.

5. 5

   The $24,500 limit (2026 — subject to change annually) doesn't include employer matching contributions. Your employer's match is on top of your $24,500.

Open a taxable brokerage account

Retirement accounts are powerful but restricted — you can't touch the money without penalty until 59½. A taxable brokerage account gives you the same investment options with no contribution limits and no age restrictions. It's also where you'll build wealth that's accessible before retirement — for large purchases, early financial independence, or anything else that doesn't fit neatly into a retirement timeline.

1. 1

   Open a taxable brokerage account at the same institution as your Roth IRA — Fidelity, Schwab, or Vanguard. Keeping everything in one place simplifies management.

2. 2

   Fund it with whatever is left after maxing your retirement accounts. There's no required minimum contribution — even $100/month compounds over time.

3. 3

   Invest in the same low-cost index funds you use in your retirement accounts. Total US market index funds and international index funds work well here too.

4. 4

   Be aware of taxes. In a taxable account, you owe capital gains tax when you sell and income tax on dividends. Holding index funds long-term minimizes this — you're rarely triggering taxable events. Don't let tax anxiety stop you from investing, but do favor buy-and-hold over frequent trading.

5. 5

   Set up automatic monthly contributions. Consistency beats timing.

Start a dedicated down payment fund

A home is often the largest purchase of your life, and the down payment is the primary barrier. The more you put down, the lower your monthly payment, the less you pay in interest over time, and — if you hit 20% — you avoid private mortgage insurance (PMI), which is a recurring cost with no benefit to you. Saving for a down payment is a parallel track to investing, not a replacement for it.

1. 1

   Decide on a realistic target. In most markets, 20% down avoids PMI and gets you the best rates. On a $400,000 home, that's $80,000. On a $600,000 home, it's $120,000. Run the number for your target market.

2. 2

   Open a dedicated HYSA labeled 'Down Payment.' Do not commingle this with your emergency fund or general savings. Separation prevents raiding it.

3. 3

   Set a timeline. If you want to buy in 3 years and need $80,000, you need to save roughly $2,200/month. If that's not feasible, adjust the timeline or the target.

4. 4

   Keep down payment savings in cash or short-term bonds — not in the stock market. You need this money on a specific date. Market volatility is a risk you can't afford here.

5. 5

   Contribute to this fund consistently, but don't let it crowd out retirement contributions entirely. A rough order: 401(k) match → Roth IRA max → down payment savings → more 401(k).

Define your investment strategy

Most investors underperform not because they picked the wrong funds, but because they made emotional decisions — selling during downturns, chasing returns, shifting strategies based on headlines. A written investment policy statement is the antidote. It defines your rules in advance, when you're calm and thinking clearly, so you don't have to make judgment calls in the middle of a market drop.

1. 1

   Write down what you own and why. For most people: a total US market index fund, an international index fund, and optionally a bond fund. List the specific funds and their expense ratios.

2. 2

   Define your asset allocation — the percentage split between stocks and bonds. A common starting point for someone in their 30s: 90% stocks, 10% bonds. Adjust based on your timeline and risk tolerance.

3. 3

   Set a rebalancing rule. Example: 'I will rebalance once per year if any allocation drifts more than 5% from target.' Automatic rebalancing in your 401(k) or target-date funds handles this for you.

4. 4

   Write down what you will not do. 'I will not sell during a market downturn of more than 20%.' 'I will not move to cash based on news or predictions.' 'I will not buy individual stocks with more than 5% of my portfolio.' These rules matter most when you're tempted to break them.

5. 5

   Store this document somewhere you'll find it. Review it once a year — not more often. The goal is a system that requires almost no active management.