Saving Half

How much is too much when it comes to 401k investing?

QUESTION: Laura has been putting half of what she makes into a 401k. She is retired and working part-time, making $25,000 in the past 6 months. She has an emergency fund. Is that too much to put in? Dave doesn’t think so, in this September 30, 2008 call.

ANSWER: It’s wonderful to save that much as long as you are able to live your life. I would open a Roth IRA since it grows tax free, but you can do both. If you put the money into growth-stock mutual funds with long track records, you have bought mutual fund companies on sale because of the market this week. The stock market is down this year, so you are buying it cheap.

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