5. Buy Taxable Investments

So, you've saved an emergency fund, paid off your high-interest loans, maxed out your retirement accounts and HSA, and you still have money left over to invest? Neat!

You're now pretty financially stable. If you're maxing your retirement accounts every year, staying out of debt, and have a good handle on your spending, you're almost guaranteed a successful retirement.

You now have options.

I suggest continuing to buy good old index funds through a taxable brokerage account. It's easy to open one at Vanguard (or Charles Schwab, or Fidelity…). Pick your preferred funds and set up automated investing to contribute a certain amount every month.

One important tip: for tax purposes, try to keep anything that pays dividends (like bonds or REITs) in tax-advantaged accounts. Dividends are taxed as soon as they pay out, but capital gains are only realized when stocks are sold.

This means that your tax-advantaged accounts will be relatively bond-heavy, while your taxable accounts will be stock-heavy (possibly 100% stock, depending on how your portfolio is balanced and on your after-tax income).

Alternative: Save Up a Down Payment

If you're interested in buying a house, you're at a stage where you could probably afford to start saving up for a down payment. Instead of (or, possibly, in addition to) buying index funds, just pile up cash until you're ready to close a deal.

You'll want to use a savings account or CD to store your down payment fund, not a brokerage account. You're probably planning on buying within the next few years, and market volatility in such a short period is a bit high.

You might also consider buying an investment property at this stage.

Alternative: Pay Down Low-Interest Debt

Since the interest rate on any low-interest debt is by definition lower than we'd expect to make on the market, this isn't likely to be the optimal use of your money.

In some situations, though, you might want to do it anyway! For example, if you're anticipating a big pay cut in the future (perhaps you're planning on taking a year off), you might prioritize removing a known debt payment over earning the higher-but-volatile returns that you'd get on the market.

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