Investing in your retirement is a smart thing to do. As defined benefit plans give way to defined contribution plans, the onus of retirement is more and more in our own hands. Gone on the days when being a faithful company man meant that you’d be taken care of in retirement.
Something to remember though, is that there’s more to investing than just retirement. Having a healthy mid-term investment portfolio is also important. If you’re young, it may be even more important than retirement savings. Just like disability insurance is more important than life insurance when you’re young, so too is non-retirement investing.
If you hope to make it big and retire young, then you’ll need your non-retirement investments to get you from the time you stop working to the time when you can use your actual retirement savings. I plan to be done with a “regular” job way before I hit age 59-1/2.
Don’t get me wrong. Retirement accounts are really important. You should certainly take advantage of all they have to offer. Tax-deferred growth and company matching are a few things that come to mind. Just don’t make it your sole investment focus.
After you’ve maxed out your 401K, then the next step might be to build a non-retirement portfolio before investing in an IRA.
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