r/FinancialPlanning • u/kujorocks • 1d ago

Putting money in 401k with very limited investment options vs buying etfs in brokerage account.

I work for a company that gives 3% of our salaries into 401k whether I contribute to 401k or not. I am in my late 30’s and I have been maxing out for most last 5 yrs. The investments in 401k are not cheap. The cheapest and only option we have is Fidelity Total stock market fund. The rest are target funds which i have no interest in it. Does it make sense to just put that savings into brokerage account and use ETF like SCHG and save there instead of contributing to 401k? I understand the tax benefits of 401k but thinking getting better returns and better options to invest might offset the tax benefits.

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u/toodleoo77 1d ago

Fidelity total market fund is a great option, you’re way overthinking this. I would be shocked if you came out ahead doing a brokerage account vs the 401k with the tax savings.

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u/kujorocks 1d ago

SCHG is up 143% over last years vs 82% for fidelity total market. Ytd SCHG is up 39% vs 26 of Fidelity total market.

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u/toodleoo77 1d ago

Past returns aren’t predictive of future returns. No one has a crystal ball. That’s why total market funds are so popular - just buy everything.