Intro to Investing 

Investment Accounts

401(k)

401(k) are employee-sponsored retirement accounts. Annual contribution limits are much higher than other accounts, standing at $24,500 as of 2026, with an extra $8,000 allowed for those over 50, and another $11,250 for people aged 60-63. These are often through work, with many employers offering a contribution match. It is highly recommended to contribute enough to get your full match, as you instantly double your money. This account can be pre-tax (traditional) or post-tax (Roth), but are typically pre-tax, while gains within the account are tax-free. Pre-tax means you are given a tax break during the contribution year and income taxes are taken out when you withdraw from the account, while post-tax means you pay the taxes up front as part of your normal income tax and any withdrawals are tax-free.

Individual Retirement Account (IRA)

IRAs are independent from an employer and can either by pre-tax or post-tax. You can easily open one at any brokerage for no cost. Just like with a 401(k), the gains within the account are tax-free. These accounts have lower annual contribution limits, standing at $7,500 as of 2026, with an extra $1,100 for people over 50.

Health Savings Account (HSA)

HSAs are available for people enrolled in HSA-eligible health insurance plans, which are mostly high-deductible healthcare plans (HDHP). If you have one of those plans, you can contribute up to $4,400 as of 2026. This account is triple-tax advantaged as long as you use it for medical expenses, which means no tax on contributions, gains, or withdrawals. Due to this, it is often recommended to not withdraw for medical purposes and instead let the investments grow and withdraw in retirement.

Taxable Brokerage Account

Taxable Brokerage Accounts are independent from an employer, and there is no contribution limit or additional tax benefits. Like the IRA, you can easily open one at any brokerage for no cost.

Recommendation: Open a 401k through your work provider, an HSA if your insurance allows it, and a Roth IRA and a taxable brokerage account through one of the brokers below:

• Fidelity

• Schwab

• Vanguard

Asset Classes

Before you buy anything, you need to understand what you are actually purchasing. We will walk you through the primary "asset classes", the broad categories of investments that make up the financial universe: cash, bonds, and stocks.

Cash

Cash will be your physical dollars and checking & savings account balances. This is the safest portion of your portfolio and has low, consistent returns.

Bonds (Fixed Income)

Bonds include both individual bonds and bond funds. Treasury bills, certificates of deposits, and other low-risk financial instruments may be considered cash equivalents or bonds depending on the term (shorter = closer to cash, longer = closer to bonds). Cash and bonds are both characterized by low risk, short maturities (durations), and high liquidity (easy to pull out).

Stocks (Equities)

Stocks, or equities, is the final primary asset class, which are shares of an investable company. This is the riskiest portion of your portfolio, but just as important due to being the primarily driver of gains.

Alternative Investments

All other investable assets typically fall into the alternative investment asset class, which includes real estate, cryptocurrencies, commodities, private equities, and many others, often high-risk with low liquidity and transparency. These are breakdown down here.

Asset Allocation

The basic factors to consider are that stocks are riskier in the short term due to volatility, while having too much in bonds and cash is riskier in the long term due to opportunity cost and inflation.

Cash

It is advisable to build up an emergency savings equal to 3-6 months of expenses, with three months being adequate for people with consistent income, and six for those whose income varies month to month. Then add about $1-2k extra to keep in your checking account. You should be paying your expenses with your rolling income, so that is not included in here.

Stocks & Bonds

The general rule of thumb, albeit an oversimplification, is to start with 120, then subtract your age. That gives you your stock allocation, with bonds filling out the rest. For example, a 30 year old will have 90% in stocks and 10% in bonds. This makes sense, since at younger ages, volatility matters less, while when in or near retirement, you won't have the time horizon to stomach long drawdowns.

It is important to note that this is just a starting point and not be strictly adhered to; your asset allocation will vary based on various circumstances, such as income, debt, and risk tolerance.