Summary of Where to Invest Extra Funds

Overview of Where to Invest Extra Funds by DIY Money

In this episode of DIY Money, the hosts answer a listener question from Jessica, a 27-year-old early-career saver who already has an emergency fund and is maxing out her Roth IRA. She wants to know whether extra money should go into her employer’s 403(b) or a taxable brokerage account. The hosts use her question to reinforce the DIY Money framework: save consistently, prioritize retirement, and keep short-term money out of the market.

Main Question: 403(b) vs. Taxable Brokerage

Jessica’s situation is fairly common: she’s in her late 20s, financially stable, and wants to know the best place for additional savings.

The hosts’ main recommendation

• If her 403(b) offers a Roth option, that’s likely the best place for most or all of her retirement savings.
• If there is no Roth 403(b) option, then:
  • Continue using the Roth IRA first
  • Put additional long-term money into a taxable brokerage account

Why the Roth 403(b) could be a strong choice

• Higher contribution limits than a Roth IRA
• Tax-free growth and tax-free withdrawals in retirement if used properly
• Great option for someone in her 20s who likely doesn’t need the immediate tax deduction from traditional contributions

Key Financial Principles Reinforced

Save at least 10% for retirement

The hosts strongly emphasize the 10-10-80 plan:

• 10% give
• 10% save
• 80% live on

Their point is that your own 10% retirement savings should be treated as untouchable, and employer match should be considered a bonus—not part of your 10%.

Start early and keep it simple

• People who start saving in their 20s often need to save less later than those who wait until their 30s.
• The hosts encourage simple, automated investing:
  • Index funds
  • Target-date funds
  • Set-it-and-forget-it contributions

Separate retirement money from near-term goals

Logan adds an important nuance: not all extra money should be treated the same.

• Retirement savings: go to Roth IRA, Roth 403(b), or another retirement account
• Mid-term/short-term goals: can go into a brokerage or savings account depending on the timeline

Important Warning: Don’t Invest Money You’ll Need Soon

A major takeaway from the episode:

• If you’ll need the money in five years or less, do not invest it
• Keep it in a high-yield savings account instead
• The market may have been strong lately, but short-term money should not be exposed to market risk

This is one of the hosts’ core “don’t force the market” reminders.

DIY Money Framework Mentioned

The hosts briefly revisit their broader financial path:

1. Track expenses
2. Build a budget
3. Create a financial moat / emergency fund
4. Pay off debt
5. Move into wealth development

Jessica is already in the wealth development stage, which is why the question is now about where to allocate extra savings.

Final Takeaways

• Prioritize Roth retirement accounts when possible, especially at a young age
• Use the Roth 403(b) if available and if you want to shelter more money than a Roth IRA allows
• Brokerage accounts are good for additional investing, especially for money not needed soon
• Do not invest funds needed within five years
• Keep saving, stay consistent, and treat retirement contributions as a long-term habit

Notable Closing Reminder

The hosts close with their usual principle:

Live on less than you make, invest the rest, and do it for a very long time.

They also remind listeners that questions sent in to the show may receive a $25 Amazon gift card.