[flan2007]

I am in my late 20's the company I work for offers other benefits just not 401K,where is the best place to save my money ,is it in a IRA account? And how much yearly/monthly should I be putting away? Thanks a lot

[ebaines]

My two cents: I would suggest putting the max that you are allowed into an IRA account. The max contribution that people under 50 can make this year is $4K. The limit goes up to $5K in 2008. The first big decision is whether to invest in a traditional IRA or a Roth IRA. Since your company does not offer a retirement plan of its own, if you go with a traditional IRA you should be able to deduct whatever you contribute this year from your income taxes. The money will grow tax free, and once you reach retirement and start taking withdrawals you will have to pay ordinary income taxes on whatever you take out. With a Roth IRA you will not be able to deduct your contribution amounts, but the money grows tax free, and when you withdraw the money at retirement the entire amount is tax-free. There's no clear answer as to which is "best," but in general, it is probably wise to go with a Roth IRA if you are in a relatively low tax bracket today, and a traditional IRA if you are in a high bracket.

If you have extra cash to invest after that, you should consider tax-efficient investments such as some of the low-cost index funds from Vanguard, Fidelity, etc. for long-term investment. You get no tax break up front, but over the years they should appreciate nicely, and most of the gains should be at capital gains rates, not ordinary income.

Be wary of the other tax-advantaged investment vehicles such as variable life insurance policies. These are usually sold as investments that allow your money to grow tax-fee as long as you stay invested, but they typically carry very high fees and often have onerous penalties if you decide to change the investments down the road. And once you cash them in you pay taxes at the ordinary income tax rate, as opposed to the much lower capital gain rates.