I got out of employer 401k. Yes they are tax advantaged, but your money is hostage and you will be harshly penalized if you ever need it for some unapproved use. I find that these penalties cause me to be much more conservative with the amount of money that I am willing to invest.
Since I got out of tax advantaged accounts I now use an online broker to buy exclusively index funds. In the past I was only comfortable investing say 15% of my money (after living expenses), but now I feel comfortable investing 40-50%. I don't need to simultaneously keep a huge amount of cash savings because at any time I can sell my index funds and have the money in less than a month.
You also pay extremely low fees with index funds whereas 401k plans can have pretty high fees depending on the provider.
Sorry, but this is terrible advice. You could be sheltering $16,500 per year from all taxes until retirement, not to mention possible employer matches.
Right now, you probably have to earn about $23,000 (assuming 30% tax rate) just to invest the same $16,500. Then, you have to pay capital gains taxes or regular income tax every time you receive dividends, yields, or sell a stock at a profit. These taxes can eat anywhere from 20% to 38.5% of your profit on every single transaction.
If you sat down with a calculator and figured out the difference between saving $16,500 in a 401k and saving that much in a non tax advantaged account, you are literally throwing away over $1 million throughout the course of your career.
Not to mention, you can take a loan against your 401k if you really need the money.
Since I got out of tax advantaged accounts I now use an online broker to buy exclusively index funds. In the past I was only comfortable investing say 15% of my money (after living expenses), but now I feel comfortable investing 40-50%. I don't need to simultaneously keep a huge amount of cash savings because at any time I can sell my index funds and have the money in less than a month.
You also pay extremely low fees with index funds whereas 401k plans can have pretty high fees depending on the provider.