Baby Step 4 - Invest 15% for your future!

Now that you are debt free and have a fully funded emergency fund, it is time to start building investing and building wealth! You should take 15% of your income each month and invest it in your 401k, traditional Roth IRA, and mutual funds.

The strategy here is to invest in your 401k up to the amount that your employer matches and then max out your IRA. (For instance, if my company matches 100% for up to $2000 a year, then I would first put $2000 into my 401k so that my company would match that. I would then take the rest of my money and max out my Roth IRA [you can put up to $4000 a year into a Roth IRA]. After I had maxed out my Roth IRA, I would then max out my 401k). With any additionaly money, I would then invest in good growth stock mutual funds that have a long term proven track record of 10 years or more.