Where to Save?

Crystal just started a new job making $50,000 a year, and she has been offered a 401(k) with no match. Should she put money into the 401(k) or a high-yield CD? Dave has another recommendation.

QUESTION: Crystal in New York is 26, and she’s debt-free. She just started a new job making $50,000 a year, and she has been offered a 401(k) with no match. Should she put money into the 401(k) or a high-yield CD? Dave has another recommendation.

ANSWER: I would do a Roth IRA up to $5,000 a year for your first investment into good growth stock mutual funds that have a long track record. The Roth IRA growing tax-free, mathematically, will be superior to a non-matching 401(k).

If you wanted to do more than the $5,000 going into the Roth IRA, you could put some into the 401(k), again with good growth -stock mutual funds that have been open at least five years—preferably 10 years or more.