Where to Start Investing (Part 3)

Last week, we focused on employer-sponsored retirement plans — 401(k)s, 403(b)s, and similar options. We saw how to choose funds wisely inside those plans and why low costs, diversification, and simplicity matter. Employer plans are often the easiest first step because contributions come straight from your paycheck, and many companies add a matching contribution — essentially free money.

But what if your employer doesn’t offer a plan? Or what if you’ve already contributed up to the annual limit and want to save more? That’s when it’s time to look at investment options outside of work. These accounts don’t depend on your employer, which means you have more control over where your money goes, what you invest in, and how much flexibility you have with contributions and withdrawals.

The good news is that these outside accounts can be just as powerful as employer plans — and in some cases, even better. With options like IRAs, brokerage accounts, and other platforms, you can still take advantage of tax benefits, build wealth for retirement, and design a strategy that fits your personal goals.

💡 This Week’s Focus: Investing on Your Own
Stepping outside of an employer plan doesn’t mean you lose good options — it actually gives you more flexibility. With tools like IRAs and brokerage accounts, you can still invest in funds, stocks, and ETFs while tailoring your strategy to your own goals.

IRAs offer valuable tax advantages, though they come with annual limits. Brokerage accounts have no limits, giving you room to invest as much as you want, though without the same tax breaks. Together, these accounts let you keep building wealth consistently, even if your job doesn’t provide a plan.

📖 Verse of the Week
“Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty.” — Proverbs 21:5 (NLT)

Building wealth takes steady, intentional choices — not rushing into the latest trend.

Investment Options Outside Employer Plans

1. IRAs (Individual Retirement Accounts)
IRAs are the most common alternative to employer plans. They let you open an account on your own, choose your investments, and enjoy tax advantages along the way. The same vehicles we discussed earlier — like stocks, bonds, mutual funds, ETFs, and index funds — are all available inside an IRA. There are two main types:

• Traditional IRA

  • Contributions may be tax-deductible in the year you make them.

  • Money grows tax-deferred (no taxes each year).

  • Withdrawals in retirement are taxed as income.

  • Early withdrawals (before 59½): usually taxed and hit with a 10% penalty unless an exception applies.

  • Think: save on taxes now, but pay later.

• Roth IRA

  • Contributions are made with after-tax dollars (no deduction upfront).

  • Money grows tax-free.

  • Qualified withdrawals in retirement are completely tax-free.

  • Early withdrawals (before 59½): contributions can always be withdrawn without penalty, but earnings are usually taxed + penalized unless an exception applies.

  • Think: pay taxes now, never again later.

  • Note: Roth IRAs have income limits. In 2025, single filers must earn under $150,000, and married couples filing jointly under $236,000, to make the full contribution.

👉 Contribution Limit (2025): $7,000 per year ($8,000 if 50+).
👉 Rule of Thumb: If you expect to be in a higher tax bracket later, a Roth IRA often makes more sense. If you expect to be in a lower bracket, a Traditional IRA may provide greater benefit.

📌 Example: Maria is 30 and contributes $200/month to a Roth IRA. Over time, her money grows tax-free. She knows she can always withdraw her contributions if needed, but if she waits until retirement, she’ll also enjoy tax-free growth.

2. Taxable Brokerage Accounts
A brokerage account is the most flexible way to invest. Unlike IRAs, there are no tax breaks, but there are also no limits on how much you can contribute or when you can take money out. You can invest in stocks, bonds, ETFs, or mutual funds — and sell anytime.

• No contribution limits — invest as much as you want.

• Investments can grow as much as the market allows, but dividends, interest, and capital gains are taxed each year.

• No withdrawal restrictions — you can sell and take money out anytime.

• Often used after maxing out retirement accounts, for saving toward big goals, or just for building extra wealth.

• Taxes reduce returns since gains and income are taxable each year.

📌 Example: David maxes out his 401(k) and Roth IRA but still wants to invest more. He opens a Fidelity brokerage account and buys index funds. With no contribution limits, he can invest as much as he wants — but he knows he’ll owe taxes each year on any income or profits.

Best Platforms to Get Started

Opening an investment account today is as simple as opening a checking account. Most major platforms let you apply online in about 15 minutes. Once the account is open, you can transfer money from your bank and even set up automatic contributions — so investing happens in the background without extra effort.

Here are some of the best platforms to consider:

• Vanguard → Famous for its low-cost index funds and simple, no-frills approach. Great for long-term investors who want to “set it and forget it.”

• Fidelity → Offers a wide variety of funds, excellent research tools, and no minimums to start. Perfect if you want flexibility and lots of options.

• Charles Schwab → Known for top-notch customer service, beginner-friendly tools, and a strong lineup of low-cost funds.

👉 Tip: You can make investing nearly automatic. Set up a recurring transfer from your bank into your brokerage account and schedule automatic purchases of index funds. That way, you don’t have to think about timing the market — your money goes in consistently month after month.

🔎 Using Morningstar to Compare Funds:
Last week we walked through how to use Morningstar to research funds. It’s worth repeating:

1. Search the fund by name or ticker (for example: VFIAX for Vanguard’s S&P 500 index fund).

2. Look at the expense ratio — lower is better. Aim for under 0.20%.

3. Check diversification — a good index fund should give you exposure to hundreds of companies.

4. Avoid “load” funds (sales commissions). Stick to no-load funds.

The bottom line: You don’t need dozens of accounts or complex strategies. Open an account online, automate your contributions, and stick with low-cost index funds. Over time, consistency beats complexity.

🎯 Weekly Challenge
Take a look at your current situation:

• If you already have an employer-sponsored plan → consider whether it makes sense to add an IRA or brokerage account alongside it, especially if you’ve reached the contribution limit or your plan options are limited.

• If you don’t have an employer plan → explore opening an IRA or a taxable brokerage account so you can still invest consistently and take advantage of tax benefits where possible.

The goal isn’t to open more accounts just for the sake of it — it’s to make sure you’re using the right tools for your situation.

💬 Reflection Questions

1. Do I have a plan for investing beyond my employer’s retirement account?

2. Would a Roth or Traditional IRA fit better with my current tax situation?

3. Which platform (Vanguard, Fidelity, or Schwab) feels like the best fit for me to get started?

📢 What’s Coming Next
Next week, we’ll explore retirement options for the self-employed — including SEP IRAs and Solo 401(k)s — and how they allow business owners to save aggressively while also reducing taxes.

Stay steady. Each wise decision you make today builds a more secure tomorrow.

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Blessings and financial peace to you!