I graduated college last year and began a career at a company with a 401K option.
I cannot pull any money out of the Roth 401K without tax consequences or a penalty.
I am interested in starting a business 5-20 years in the future.
I am interested in purchasing a home 10-20 years in the futre.
I currently invest 100% of my investment money into a Roth 401K, and 0% into any taxable assets.
Given my goals, would it be advisable to diversify my investments between taxable investments (meaning a no-load, low-fee index fund) and a Roth 401K?
If I invested in a taxable asset, I could sell it for use as capital in a business and/or home. A home would result in no rent payments except interest (but the expense of repairs would increase), with appreciation on the home. A business could either result in more revenues, or bankruptcy. In either situation, I am substantially decreasing the value of the 401K on retirement.
In other words, should a young adult who would like a home and business in the next two decades invest all of his investment money into a tax-sheltered 401K, or diversify it between the tax shelter and a taxable investment?