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Early career · Stage 2

The decade compounding loves most.

A dollar invested at 25 becomes ~$21 by age 65 at 8%. That same dollar invested at 45 becomes ~$4.66. Time is your single biggest financial asset — and you have more of it than you ever will again.

Your priorities, in order

  1. Max your Roth IRA every year

    $7,500/year in 2026 ($625/month). Tax-free growth forever. Roth is mathematically optimal when you're in a low tax bracket now and expect to earn more later — exactly your situation.

  2. Push 401(k) past the match

    After capturing the match (always) and maxing Roth IRA, push 401(k) toward the $24,500 limit. Every $5,000 of raises absorbed into 401(k) instead of lifestyle is $54,000 in 30 years at 8%.

  3. Fight lifestyle creep — the wealth killer

    When you get a raise, save half. Keep your housing under 25% of take-home. Drive a paid-off car for as long as possible. Every $5K/year of avoided lifestyle inflation = ~$230K extra at 65.

  4. Build skills > side income > investments

    A $20K raise from a skill upgrade compounds for the rest of your career — far more than any investment trick. Spend the first decade aggressively investing in your earning ceiling.

  5. Stay invested through volatility

    Markets will drop 30%+ at least 2-3 times in your career. Don't sell. Crashes during accumulation are actually a gift — you're buying more shares cheap. Investors who panic-sold in 2008 missed the +600% recovery.

Calculators built for this stage

Compound investment calculator
Project portfolio growth at historical market rates.
Retirement calculator
When can you retire? Find your FI number.
Retire by 45 calculator
FIRE math for early retirement.
Save $1M in 20 years
Exact monthly savings to hit a million.

Recommended reading

401(k) vs Roth IRA
Which to prioritize based on your tax bracket.
How to invest $10,000
The simple priority playbook.
Dollar-cost averaging vs lump sum
Lump sum wins 66% of the time, but DCA has its place.
Expense ratios: the hidden tax
Why a 1% fee consumes 25% of your wealth in 30 years.

Frequently asked questions

What savings rate should I target in my 20s?

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Target 15-20% of gross income for traditional retirement at 65. For FIRE goals (retire at 45), 40-50%+. The savings rate dictates years-to-FI more than any other variable.

Roth or Traditional 401(k) when both are offered?

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In your 20s and early 30s with lower income, Roth 401(k) typically wins — pay taxes now at low rates, withdraw tax-free when you're wealthier. After your income hits 32%+ marginal bracket, Traditional often becomes better.

Should I save for a house or invest in retirement?

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Review the 401(k) match before saving for a house, but include vesting, taxes, fees, liquidity and essential payments. Beyond that, the home goal depends on its timeline and risk capacity; use safer cash options for short horizons and compare alternatives for longer ones.
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