Personal finance twitter will tell you ten different priority orders for retirement and investment accounts. Most of them are wrong for most people, because they assume you have more money than you do, or less debt than you do, or a tax situation you do not have. Here is the sequence we coach members through.
The default stack (for most working Americans)
- Capture the 401(k) match. If your employer matches, say, 5% of your salary, contribute at least that 5%. Not doing this is a 100% guaranteed loss. Nothing else you do with money will outperform.
- Kill high-interest debt. Any debt above roughly 8% APR — credit cards, most personal loans, some student loans — beats the expected after-tax return of investing. Pay these off before you pile into brokerage accounts.
- Build a starter emergency fund. One month of expenses in a high-yield savings account. This is the floor that keeps the next car repair from going on a credit card.
- Max an HSA if you have one. A Health Savings Account is the single best tax-advantaged account in the US code — tax deduction going in, tax-free growth, tax-free withdrawals for medical. After age 65, it works like a traditional IRA for anything.
- Max a Roth IRA. $7,000 a year (2025 limit; $8,000 if you are 50+). Tax-free growth forever. If your income is too high for direct Roth contributions, a backdoor Roth is usually fine.
- Go back to the 401(k) up to the limit. $23,500 in 2025, $31,000 if 50+. Now you are maxing real tax-advantaged space.
- Then taxable brokerage or 529s. After you have maxed tax-advantaged space, a regular brokerage account or a 529 for kids' college comes next.
Why this order beats the obvious one
Most people stop at step 1 — they capture the match and then either sit on excess cash or overpay a 6% mortgage instead of maxing a Roth IRA. Over 30 years, the missed Roth compounding usually costs more than the interest saved on early mortgage prepayment.
Skipping the HSA is the other common error. An HSA combines the best features of a Roth and a traditional account. If your employer offers one and you can afford the deductible, fund it hard.
What to invest in, once the accounts are funded
For most people, a simple three-fund portfolio (US total market, international, bonds) or a single target-date index fund is fine and will beat 80% of managed portfolios over 30 years. You do not need to pick stocks. You do not need crypto. You need time in the market, low fees, and to not panic-sell when it drops 30% (because it will).
Your first move this week
Log into your 401(k). Check your current contribution percentage against the match. If you are leaving match on the table, that is the biggest win available. Everything else is a marathon.
This post is general education. Account rules, contribution limits, and tax treatment change. For advice on your specific situation, talk to a CFP, CPA, or fiduciary financial advisor.