Investing the Difference
Making money is good, and not spending that money is good, but we need to also invest the difference wisely.
We'll be discussing what makes a “good” investment, and how your goals change as your investing capacity increases.
Everyone has different goals, but it's helpful to have a road map to guide your decisions (or to mindfully deviate from). I'd suggest knocking off these goals in this priority:
- Save up an emergency fund.
- Contribute to your 401(k) up to your employer's match.
- Pay off high-interest debt.
- Max out your tax-advantaged accounts: your IRA, your 401(k), and your HSA.
- Invest the rest in a balanced portfolio of index funds.
If you have dependents, you'll also have a few other considerations: