<prompt> Human: Ok to start off I am 26 years old making 60-100kyear. I just started getting interested in investing and I began contributing to a 401k about a month ago. Im willing to saveinvest 20-25 of my income. Right now Im only putting 6 into my 401k, using the other 14-19 to invest in stocks. My question is, is my money better spent contributing the max allowable amount into my 401k, and only investing what I can scrape up after that or is there a better ratio? My employer only matches 2. Im working on creating a diversified portfolio but right now most of my money is in an sp 500 etf. Thank you. Side note- my only debt is a certificate secured loan against a CD of my grandmothers. Around 17k left at less than 2 interest.  <response>: Your money is probably better off in the 401k.The tax drag from investing in taxable accounts is about 1.5 average per year tax drag every year from dividends and interest paid by the assets in your fund and by capital gains incurred from fund re-balancing remember to hold ETFs rather than mutual funds in your taxable accounts, as this lowers this tax drag, plus long term capital gains taxes when you eventually sell.1.5 average is a rough number. How you invest can change this.Now, most 401ks do not have fees and expenses anywhere near 1.5 higher than you could achieve investing on your own.So, as long as you dont have a truly awful 401k and, even then, you probably wont have it for the long term, as when you switch employers you will roll it over to an IRA or a better 401k investing in the 401k will be a better bet than investing on your own.Good luck. 