Investing for a 23-Year-Old
At 23, many people carry student loan debt alongside a first or second job. The investing-versus-loan-payoff decision depends on rate: federal student loans at or below 6 percent generally favor investing in a 401(k) up to the employer match, then contributing to a Roth IRA, before accelerating loan paydown. Private loans above 8 percent generally favor aggressive payoff before taxable investing. Loans between those ranges require individual judgment based on your tax bracket and risk tolerance.
If your income is under $150,000 (single filer), you qualify for the full Roth IRA contribution. At 23, every dollar contributed to a Roth IRA has roughly 40 years of compound growth potential before traditional retirement age. Contributions (not earnings) can be withdrawn penalty-free at any time, which reduces the risk of locking money away you might need.