For a guide to asset allocation, diversification, and building your first investment portfolio, see the Portfolio Basics hub.
A $40K earner and a $200K earner shouldn’t invest the same way. Your income determines which accounts to prioritize, whether Roth or Traditional saves you more, what tax strategies are available, and how aggressively to invest. This guide gives you a specific investment playbook for every income bracket — no vague advice, just exact moves.
Quick Answer: Your Priority by Income
Gross Income
Step 1
Step 2
Step 3
Step 4
Under $30K
Emergency fund
Employer match if available
Roth IRA (even $50/mo)
—
$30K-$50K
Emergency fund + full match
Roth IRA ($7,000)
Increase 401(k) to 15%
HSA if eligible
$50K-$75K
Full match + Roth IRA
HSA max ($4,300/$8,550)
Max 401(k) ($23,500)
Taxable brokerage
$75K-$100K
Max Roth IRA
Max 401(k)
HSA max
Taxable brokerage
$100K-$150K
Max 401(k)
Backdoor Roth IRA
HSA + mega backdoor if available
Taxable brokerage
$150K-$250K
Max all tax-advantaged
Backdoor Roth
Tax-loss harvesting in taxable
Real estate / alternatives
$250K-$500K
Max all accounts
Backdoor Roth + mega backdoor
Tax-managed taxable portfolio
Donor-advised fund
$500K+
Full tax-advantaged + taxable
Municipal bonds
Alternative investments
Estate planning vehicles
Investing on Under $30K/Year
You’re in the 10-12% federal tax bracket. Every dollar counts, so minimize fees and maximize employer contributions.
Your Investment Playbook
Priority
Action
Amount
Account
1
Emergency fund
$1,000 minimum, then 3 months
High-yield savings (4.00%+ APY)
2
Employer 401(k) match
Just enough to get full match
401(k) — 100% in target-date fund
3
Roth IRA
Whatever you can ($50-$200/mo)
Fidelity or Schwab (no minimums)
Why Roth Is Perfect at This Income
At a 10-12% tax bracket, paying taxes now is a bargain. Your Roth contributions grow tax-free forever. Even $100/month invested from age 25 to 65 at 8% average returns = $349,000 — all tax-free at withdrawal.
Roth IRA at $100/mo
After 10 Years
After 20 Years
After 30 Years
After 40 Years
Total contributed
$12,000
$24,000
$36,000
$48,000
Account value (8%)
$18,295
$58,902
$141,761
$349,101
Tax on withdrawal
$0
$0
$0
$0
Best Funds at This Income
Keep it dead simple — one fund:
Fund
Expense Ratio
What It Does
Fidelity ZERO Total Market (FZROX)
0.00%
Entire US stock market, no minimum
Vanguard Target Date Fund
0.08%
Auto-adjusts stocks/bonds as you age
What to Avoid
High-fee 401(k) plans — if your plan has only expensive options (1%+ expense ratio), contribute just enough for the match and put the rest in an IRA
Whole life insurance marketed as “investment” — the fees are 10-20x index funds
Crypto as your primary investment — not until you have the basics covered
Investing on $30K-$50K/Year
You’re in the 12% tax bracket. The Roth IRA is your most powerful tool. Start getting serious about regular contributions.
Your Investment Playbook
Priority
Action
Amount
Account
1
Emergency fund
3-6 months expenses ($6K-$15K)
High-yield savings
2
401(k) match
Up to match (typically 3-6%)
401(k) → target-date or total market fund
3
Roth IRA
$7,000/year ($583/mo)
Fidelity, Schwab, or Vanguard
4
Increase 401(k)
Up to 15% of gross
401(k) → diversified index funds
5
HSA (if eligible)
$4,300 individual / $8,550 family
Fidelity HSA → invest in index funds
Sample Portfolio: $40K Income
Account
Annual Contribution
Fund
Why
401(k)
$2,400 (6% with 3% match = $3,600 total)
Target-date fund
Employer match = instant 50% return
Roth IRA
$7,000
FZROX or VTI
Tax-free growth for decades
HSA
$4,300 (if eligible)
Total market index
Triple tax advantage
Total invested
$13,700-$14,900/year
34-37% savings rate
That savings rate may feel aggressive on $40K. Even half those amounts puts you far ahead of the average American saving 4.4%.
Investing on $50K-$75K/Year
You’re in the 22% bracket (or close to it). Roth is still excellent, but start thinking strategically about where pre-tax contributions save you money.
Your Investment Playbook
Priority
Action
Amount
Account
1
401(k) to full match
3-6% of salary
401(k) → total market index or target-date
2
Roth IRA max
$7,000
Fidelity or Schwab
3
HSA max
$4,300 / $8,550
Fidelity HSA → invest everything
4
Increase 401(k)
Up to $23,500
401(k) → diversified portfolio
5
Taxable brokerage
Remaining savings
VTI + VXUS (80/20)
Roth vs. Traditional at This Income: The Math
Scenario
$60K Income, 22% Bracket
Roth (Pay Tax Now)
Traditional (Defer Tax)
Contribution
$7,000
$7,000 after-tax
$7,000 pre-tax (saves $1,540 now)
After 30 years (8%)
$75,788
$75,788
Tax at withdrawal (assume 22%)
$0
-$16,673
Net after tax
$75,788
$59,115
Verdict: At the 22% bracket, Roth wins if you expect to stay in this bracket or higher in retirement. Traditional wins only if you’re confident your retirement tax rate will be lower (15% or less).
Portfolio Allocation: $60K Income, Age 30
Asset
Allocation
Fund
Account
US stocks
60%
VTI / FZROX
All accounts
International stocks
25%
VXUS / FZILX
Taxable (for foreign tax credit)
Bonds
10%
BND / FXNAX
401(k) or IRA (tax-inefficient)
REITs
5%
VNQ
IRA (tax-inefficient)
Investing on $75K-$100K/Year
You’re solidly in the 22% bracket, possibly touching 24%. Max out tax-advantaged accounts before moving to taxable.
If you’re maxing all three, you’re in the top 5% of savers. Your taxable income drops from $85K to ~$57K after 401(k) and HSA deductions.
Starting to Think About Asset Location
At this income, tax efficiency in your taxable brokerage starts to matter:
Asset
Best Account
Reason
US index funds (VTI)
Taxable brokerage
Low turnover, qualified dividend rates
International funds (VXUS)
Taxable brokerage
Foreign tax credit only available in taxable
Bonds (BND)
401(k) or IRA
Interest taxed as ordinary income
REITs (VNQ)
IRA or 401(k)
Dividends taxed as ordinary income
Investing on $100K-$150K/Year
You’re in the 24% bracket. Backdoor Roth IRA becomes necessary near the top of this range. Tax optimization starts paying real dividends.
Your Investment Playbook
Priority
Action
Amount
Account
1
Max 401(k)
$23,500 (Traditional to reduce AGI)
401(k)
2
Backdoor Roth IRA
$7,000
Fidelity or Schwab (Traditional IRA → convert to Roth)
3
Max HSA
$4,300 / $8,550
Fidelity HSA → invest in index funds
4
Mega backdoor Roth (if available)
Up to $46,000 additional
After-tax 401(k) → Roth conversion
5
Taxable brokerage
$10,000-$30,000+
Tax-efficient index funds (VTI, VXUS)
Roth vs. Traditional at 24% — The Tipping Point
Factor
Favor Traditional
Favor Roth
Current bracket: 24%
✅ Pre-tax saves $5,640 on $23,500
Retirement bracket likely lower
✅ Withdraw at 12-22%
Want tax diversification
✅ Roth 401(k) + Roth IRA
Young with decades of growth
✅ Tax-free compounding
State has no income tax
✅ Less benefit to Roth
Best approach at $100K-$150K: Use Traditional 401(k) for the tax deduction, Backdoor Roth IRA for tax-free growth. This gives you both pre-tax and Roth buckets for retirement flexibility.
Tax Moves at This Income
Strategy
Annual Tax Savings
Complexity
Max 401(k) Traditional
$5,640 (at 24%)
Low
HSA contribution
$1,032-$2,052
Low
Tax-loss harvesting in taxable
$500-$3,000
Medium
Charitable giving (bunching)
Varies
Medium
Backdoor Roth IRA
Future tax savings
Medium
Investing on $150K-$250K/Year
You’re in the 24-32% bracket. Tax planning is now a significant wealth-building tool. You need all the advanced strategies.
Your Investment Playbook
Priority
Action
Amount
Account
1
Max 401(k) Traditional
$23,500
401(k)
2
Backdoor Roth IRA
$7,000
Traditional → Roth conversion
3
Max HSA
$4,300 / $8,550
Fidelity HSA
4
Mega backdoor Roth
Up to $46,000
After-tax 401(k) → Roth
5
Taxable brokerage
$20,000-$80,000+
VTI + VXUS + tax-managed funds
6
I-Bonds
$10,000/year
TreasuryDirect
7
529 plan (if kids)
$5,000-$18,000/year per child
State plan (check state deduction)
Portfolio for $200K Income, Age 40
Account
Balance Target
Allocation
Funds
401(k)
$300K+
70% US / 20% international / 10% bonds
Institutional index funds
Roth IRA
$100K+
80% US / 20% international (no bonds — max growth in Roth)
VTI + VXUS
HSA
$50K+
90% stocks / 10% bonds (don’t touch until 65)
FZROX
Taxable
$150K+
70% VTI / 20% VXUS / 10% munis
Tax-efficient placement
Advanced Tax Strategies
Strategy
How It Works
Savings
Tax-loss harvesting
Sell losers in taxable to offset gains
Up to $3,000/year income offset + unlimited gain offset
Asset location
Put tax-inefficient assets in tax-advantaged accounts
0.2-0.5% annual return boost
Donor-advised fund
Bunch 5 years of charitable giving into one year, itemize
Save vs. standard deduction years
Qualified opportunity zones
Defer capital gains by investing in QOZ fund
Defer + reduce capital gains tax
Investing on $250K-$500K/Year
You’re in the 32-35% bracket. Every dollar of tax optimization has outsized impact. Consider professional guidance.
Your Investment Playbook
Priority
Action
Amount
Account
1
Max 401(k) Traditional
$23,500
401(k)
2
Backdoor Roth IRA
$7,000
Traditional → Roth
3
Max HSA
$4,300 / $8,550
Fidelity HSA
4
Mega backdoor Roth
Up to $46,000
After-tax 401(k) → Roth
5
Taxable brokerage (tax-managed)
$50,000-$200,000+
Direct indexing or tax-managed fund
6
Municipal bonds
5-15% of portfolio
Tax-equivalent yield exceeds taxable bonds
7
Real estate (optional)
Rental properties or REITs
Depreciation offsets income
Municipal Bond Math at This Income
Bond Type
Yield
Tax Bracket
Tax-Equivalent Yield
Corporate bond
5.00%
32%
5.00% (taxable)
Muni bond
3.80%
32%
5.59% (tax-free equivalent)
Muni bond
3.80%
35%
5.85% (tax-free equivalent)
At 32%+ brackets, munis beat corporate bonds on an after-tax basis. Put munis in taxable accounts, bonds in tax-advantaged.
Direct Indexing vs. Index Funds
At this income, direct indexing (owning individual stocks that replicate an index) enables daily tax-loss harvesting:
Approach
Annual Tax Alpha
Min. Investment
Providers
Index fund (VTI)
0%
$1
Any brokerage
Direct indexing
1.0-2.0% of harvested losses
$50,000-$100,000
Wealthfront, Fidelity, Schwab
Example: On a $500K taxable portfolio, direct indexing might harvest $10,000-$15,000 in losses annually → $3,200-$5,250 tax savings at 32%.
Investing on $500K+/Year
You’re in the 35-37% bracket. Investment strategy is inseparable from tax and estate planning. A fee-only advisor likely pays for themselves.
Your Investment Playbook
Priority
Action
Amount
Notes
1
Max all tax-advantaged accounts
~$81,050 total space
401(k) + backdoor Roth + HSA + mega backdoor
2
Tax-managed taxable portfolio
$200,000+/year
Direct indexing, munis, tax-managed funds
3
Donor-advised fund
Bunch $50K-$100K+
Front-load charitable giving, invest the fund
4
Real estate
Cash flow properties or syndications
Depreciation, 1031 exchanges
5
Estate planning vehicles
Irrevocable trusts, GRATs
Freeze estate value, reduce estate tax
6
Alternative investments
Private equity, hedge funds (qualified purchaser)
Portfolio diversification
Fee-Only Advisor: Worth It?
Advisor Model
Annual Cost on $2M
What You Get
DIY (index funds + TurboTax)
~$200
Fund expenses only
Robo-advisor (Wealthfront/Betterment)
$5,000 (0.25%)
Tax-loss harvesting, auto-rebalance
Fee-only planner (annual retainer)
$5,000-$15,000
Full financial plan, tax strategy, estate planning
AUM advisor (1%)
$20,000
Investment management + planning (may overpay)
AUM advisor (0.5%)
$10,000
Competitive rate for full service
At $500K+ income, a good fee-only advisor saves $10,000-$30,000+/year in tax optimization alone. The advisor pays for themselves.
Income-to-Investment Contribution Cheat Sheet
Gross Income
Target Savings Rate
Annual Investment
Monthly Investment
$30,000
10%
$3,000
$250
$50,000
15%
$7,500
$625
$75,000
20%
$15,000
$1,250
$100,000
20-25%
$20,000-$25,000
$1,667-$2,083
$150,000
25-30%
$37,500-$45,000
$3,125-$3,750
$250,000
30-40%
$75,000-$100,000
$6,250-$8,333
$500,000
40-50%
$200,000-$250,000
$16,667-$20,833
These are aggressive but achievable targets. Even hitting half these numbers puts you ahead of 80%+ of Americans at any income level.
WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.
The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy
