Here's what I think: As long as your employer does some sort of 401k match, that is where you should put your money. Why? 401K contributions are on a pretax basis meaning it reduces your taxable income which reduces your tax obligations. Second, your employer is GIVING you extra money to do this. Many employers give 50% bonus to you on the first 6% of your 401k contribution. SO, you receive a 50% return on the first 6 % and you reduce your tax obligations... a sweet deal.