401k strategy for new analysts
What do you guys personally do for 401k. I think auto enrolled at like 6%. Should I just leave it as is or up it to like 10%
Trending Content - Investment Banking Forum
| +325 | UBS Tech MD hires Son (from no-name college) as an Intern | 57 | 7h |
| +222 | Evercore Intern Seizure | 34 | 2h |
| +89 | [Official] 2026 IB Analyst Bonus Megathread (with 2025 Consolidated Pay and Perks/Benefits) | 12 | 2d |
| +55 | Is DCM actually underrated ? | 21 | 6h |
| +51 | JPM M&A is Gone??? Purely Coverage Banking??? | 20 | 1d |
| +46 | Are all Tech / TMT groups sweaty? | 33 | 18h |
| +41 | UBS Groups Ranked by Future Outlook | 20 | 6d |
| +38 | Am I behind? 31 Year Old Analyst | 9 | 1d |
| +36 | Losing my personality in Banking | 5 | 1d |
| +36 | Associate & Above IB exits | 15 | 1m |
Career Resources
I'm just contributing to meet the single-digit % match amount to get the 'free' money. Otherwise, I have no interest in maxing it out and I personally don't think in this day and age to lock up liquidity for so long like that makes much sense and unless you live in a few particular states you're going to have to pay taxes on those later on, and I'm almost certain future rates will be higher for anyone on this forum than now when they're young.
Roth IRA is a far more attractive option imo and it's easy to max it out quick for 6k (can backdoor if income to high). Contrary to popular belief, liquidity is also not actually a concern with Roth IRAs either because you can always withdraw the principle you put in completely tax/penalty free.
After that, I'd personally invest in equities how I see fit although working in IB/PE at large firms makes that very difficult with the trading restrictions put in place. Perhaps, if there is a lot left over then I would consider more into the 401k.
I continue to find this advice crazy.
If you are an analyst at 180k in NYC, your marginal tax rate is like 44%
really, you think regular income rates in retirement are likely to be higher than this?
Plus you can always roll your 401k into roth later and have it available for withdrawals in 5 years, its not locked up forever.
Most 22 year olds are going to benefit FAR more from having 19k/yr pretax going into long term S&P index fund holdings than they are from having that 10k after tax in their pocket
I won't be in NYC but rather a low COL spot in the south so I do very well think my tax rate will be higher in the future. But I did not know about the 401k roll over option into roth. I will have to look into that. 5 years is a bit longer than I would prefer but sure as hell better than having funds locked up until 60 or whatever which I do think is absurd.
In this day and age anyone can make huge money online in the simplest ways you wouldn't imagine believe me when I say the opportunities out there are insane I've done it myself and made more in the last few months than I will ever as an analyst.
However, of course, gaining experience in something tangible like IB/PE can yield major future benefits and most importantly it's essentially a "now or never" type of opportunity out of school. I won't get the opportunity ever again. Yet, I still want ample liquidity to take part in some of the opportunities out there afterwards.
This is not very good advice. As an analyst you will get as much liquidity as you need when you get a bonus. Also, it is still pretty easy to invest in equities even when working in IB, and even easier in PE.
I never want to be in a position where I have to rely on my bonus as savings. What if you get let go shortly before? It can be a dirty world out there and the opportunities for those with liquidity are endless see response above.
Why do you need so much liquidity in your investment accounts? Seriously, not good advice.
Unless you know that you're going to need cash for some kind of business you've got planned, put as much money into 401k and Roth IRA that you can. Seriously, don't waste your money early on. As a matter of fact, the reason you should put money in the 401k is because you won't want to take it out, an that will sort of force you to save. I do think that tax rates will be higher for you in retirement. In 40-50 years we could see very high top marginal tax rates for the very rich. However, that is not really part of the calculus since you should also be maxing out Roth IRA anyway.
Realistically, you don't really need to hold the money out for a business.
For the kind of business that is going to actually be attractive to you as a career alternative, for someone leaving a top IB position, you are highly likely to be able to raise VC or search fund capital
my firm does not match for the 1st year and after that match upto 3%. Should I not contribute much my first year (1-2%) and increase that when matches start.
what would your rational be for not maxing out your 401k?
moving to a new city so have additional expenditures from that, need to support parents financially slightly so the additional cash flow could be helpful. Do you think I should just eat the marginal say around 75 dollars a month and max it out.
What people seem to miss about tax rates as it comes to 401k, traditional vs. Roth etc is the standard deduction.
If you believe the married filing joint standard deduction will be around when you retire (unlikely to go away) you can draw 24k per year from traditional accounts and never pay a dime of tax on that money.
If you’re looking at the typical ~4% withdrawal rate that’s ~600k you should have in traditional accounts to draw on.
What kind of moronic advice is don't max your 401K, you need the liquidity?
Tell me where you can get a guaranteed 30-40% return IMMEDIATELY on your money. That's what you're giving up by trying to get more "liquidity".
Your 401k is taxed when you withdraw money in the future. If taxes are higher then, which they could be, and you invest in an index which doesn't pay much in dividends, and you don't buy/sell, it could be smarter to put the money in a Roth IRA instead (since you pay taxes now and withdraw tax free). Obviously, best of both worlds is to just max out 401k AND Roth IRA. I agree that "you need the liquidity" isn't great advice unless you are not making enough money to max out 401k and live in NYC.
Deserunt ea porro est consequatur non voluptatum. Est itaque doloribus aut voluptas.
Vero aut consequuntur dolores quia quae laudantium sed est. Saepe provident quae voluptate omnis molestiae. Debitis debitis dolores assumenda expedita cumque necessitatibus.
Excepturi quia eum quas quo eos. Aliquid culpa illo quibusdam quia explicabo. Labore id culpa sed rerum. Dolores dicta omnis sit aut quam ipsa vel sit. Laboriosam et maxime doloribus eum maiores iste perferendis. Adipisci eius aut explicabo quas molestiae tempora iusto amet. Odio iure eius accusantium.
Quia explicabo beatae corporis illo. Veritatis quis consequatur velit et sit eius sed. Consequatur expedita in saepe maxime.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...