The Unconventional, Better Way

Standard investment advice is some variation of the following: capture your employer match in the 401k, max out your Roth IRA, then finish maxing out your 401k. This is great advice, especially for someone who lacks financial discipline—because it locks these investments up until age 59½, ensuring they don’t waste them before then and have a nest egg to retire on. However, I think there’s an unconventional, better way for those who are disciplined.

My unconventional path is rooted in this belief: time is more valuable than money, and money’s value mostly comes from freeing up your time. Based on this belief, the better way would be to prioritize your non-retirement (taxable brokerage) account first.

Let’s say someone starts working at 18 years old. Instead of investing in retirement accounts, they pour every dollar they can (aiming for 50% of their income) into their taxable brokerage account. If they do this from ages 18 to 30, they will start their 30s in an incredible position that many dream of. They will be close to (if not) financially independent, giving them a unique freedom and position of power to enjoy life while still young.

That person will have unique confidence at work, knowing they don’t have to fear their boss or layoffs. They will be able to take greater risks in their career, knowing they have something to fall back on. They will be able to take a break from work and travel or just rest and recharge. They will have the option to pursue a lower-paying career that they find more fulfilling. And they can ensure they are always able to be present for loved ones, rather than having to be at work. In short, this person will get to live life on their terms.

Then, at age 30, they can start maxing out their Roth IRA. This still gives them about 30 years to build it up before they can access it. That is plenty of time. Now, they will build it while living life on their terms, enjoying their youth and not trapped in the rat race.

If you max out your Roth IRA starting at age 18 instead of waiting until 30 to start doing so, you will have more money by the time you are 59½, because you will have access to more tax-free money that has been compounding 12 years longer. However, you will also have spent more of the best years of your life as a slave. Freedom in your youth is worth more to me than a little extra money and tax advantages. This unconventional path only works, however, if you are able to avoid the temptation to spend the brokerage account money; you have to always view that money as your financial independence fund.

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