A common question I hear from young adults is, “Which investment accounts should I be using?” Often, the question focuses on choosing between a company 401(k) and a Roth IRA.
That’s an important decision, but it’s better answered in the context of your overall saving and investing strategy. Different accounts serve different purposes, and the goal is to give every dollar a job and put it in the right place.
To learn more about your account options and how to decide where to put your next dollar, please keep reading.
Start with the purpose of the money
Ask yourself “When will I need it?“
Money needed soon generally belongs somewhere safe and accessible. Money you won’t need for decades can generally be invested for long-term growth.
Think of your accounts as different containers for your money.
Your core accounts
Savings — Emergency and short-term needs. Focus on safety and accessibility.
401(k), 403(b) or 457(b) — Retirement savings. If your employer offers a match, consider contributing enough to receive the full match.
Traditional IRA — Retirement savings with potential tax-deductible contributions and tax-deferred growth.
Roth IRA — Retirement savings with after-tax contributions and potentially tax-free qualified withdrawals.
HSA — If eligible, an HSA can provide significant tax advantages for healthcare costs and future savings.
Brokerage account — Flexible, long-term investing outside retirement accounts.
Cryptocurrency — An optional, speculative investment. Crypto should generally be considered a small portion of your portfolio, if you choose to own it, and should not replace your financial foundation.
Other accounts to know
If you have children, 529 plans can help fund education, while Trump Accounts provide another long-term savings option for eligible children.
If you’re self-employed or own a small business, SEP IRAs and SIMPLE IRAs may provide additional retirement savings opportunities.
These accounts don’t necessarily need to be part of your strategy today. Your financial situation and goals determine which accounts make sense.
Know the limits
For 2026, the employee contribution limit for most 401(k), 403(b), and 457(b) plans is $24,500. The combined Traditional and Roth IRA limit is $7,500, while HSA limits are $4,400 for self-only coverage and $8,750 for family coverage.
Income can also affect Roth IRA eligibility and Traditional IRA deductibility. Contribution limits and rules change, so check current IRS guidance before contributing.
Look at one portfolio
Having multiple accounts doesn’t automatically mean you’re diversified. You could own the same S&P 500 fund in your 401(k), Roth IRA and brokerage account and still have essentially the same investment exposure.
Look at all your investments as one portfolio, regardless of which account holds them.
Where should your next dollar go?
A simple starting framework is:
1. Build an emergency fund.
2. Capture your employer match.
3. Consider an HSA if eligible.
4. Choose between Traditional and Roth IRA based on your circumstances.
5. Increase retirement savings.
6. Add a brokerage account for flexibility.
7. Consider 529 or Trump Accounts if you have children.
8. Treat crypto as optional and speculative.
Your income, taxes, debt, goals, family situation and risk tolerance can change the right strategy.
Give every dollar a job
The goal isn’t to find the “best” account or the investment with the highest potential return.
It’s to build the right combination of accounts and investments for the life you want to live.
For a visual summary, see the accompanying two-page information brief.
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Educational information only. Retirement account contribution limits, income limits, eligibility, tax treatment, withdrawal rules, and cryptocurrency regulations and protections can change. Check current IRS and SEC guidance before making financial decisions and consult a qualified professional for advice specific to your situation, as needed.