401k vs Christmas Club: Which One's Right for You?
Are you torn between contributing to a 401k or joining a Christmas Club? Let's break it down:
Pros of 401k:
- Pre-tax contributions
- Low-risk investments
- Compound interest
Cons of 401k:
- Locks up your money till 59 1/2
- Tax implications on withdrawals
- Risk of market fluctuations
Pros of Christmas Club:
- Immediate gratification
- No tax implications (yet)
- Can use for Christmas presents
Cons of Christmas Club:
- Limited liquidity
- May lead to overspending
- Can be a holiday-only solution
Or, you know, just do both. Because adulting is hard.
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