Building Your Financial Fourt

Our goal at MyFourt is to simplify the first steps of personal finance. There are four accounts you need to start building your financial Fourt:

  1. Checking account

  2. High Yield Savings Account "HYSA" aka Emergency Fund

  3. Retirement Account

  4. Non-Retirement Brokerage Account

4 account types

account type 1

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account type 2

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Name How does it work? Taxed? Income Limit? Contribution Limit?
HYSA Put money in, Do Nothing. It grows over time. Zero risk. Always taxed N/A N/A
401K You and/or Employer put money in. Invest it. It grows over time. Taxed coming out N/A

$23,000.00 (2024)

Employee Deferral, and up to $25% of salary or $46,000.00, whichever is lower
Roth 401K You and/or Employer put money in. Invest it. It grows over time. Taxed going in N/A

$23,000.00 (2024)

Employee Deferral, and up to $25% of salary or $46,000.00, whichever is lower
Solo 401k You put money in (as employer and/or employee). Invest it. It grows over time. Taxed coming out N/A

$69,000.00 (2024)

$23,000.00 Employee Deferral, and up to $25% of salary or $46,000.00, whichever is lower. 
Solo Roth 401k You put money in (as employer and/or employee). Invest it. It grows over time. Taxed going in N/A

$69,000.00 (2024)

$23,000.00 Employee Deferral, and up to $25% of salary or $46,000.00, whichever is lower. 
IRA You put money in. Invest it. It grows over time. Taxed coming out N/A $7000.00 (2024)
Roth IRA You put money in. Invest it. It grows over time. Taxed going in less than $146,000 $7000.00 (2024)
SEP IRA You put money in. Invest it. It grows over time. Taxed coming out N/A 25% of your net earnings from self-employment (not including contributions for yourself), up to $69,000.00
HSA You and/or Employer put money in. Invest it. It grows over time. Never taxed N/A $4,150.00 self-only, $8,300 family. (2024)
Brokerage You put money in. Invest it. It grows over time. Always taxed N/A N/A
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Account Comparisons

Use this chart to understand the differences between the accounts:

Types of Accounts

High Yield Savings Account “HYSA”

A HYSA offers a higher interest rate than a traditional savings account. A traditional savings account offers around 0.06%, and a HYSA offers right now, around 3.30% to 4.50%. This is a great place to put your emergency fund, money that you may need soon (an upcoming security deposit, down payment, other major purchase, etc.) This is not a place where your money will make you significantly more money.


Some reputable HYSAs are:

There are others that may offer a higher rate of return. They may not be FDIC insured, or there may be limits on earning that rate, for example, “5% up to $5,000.” Or they might be great! If you’re googling HYSAs, read the fine print! NerdWallet is a great resource to compare savings accounts (and other financial products!)

401k

The 401(k) is a retirement plan named after section 401(k) of the U.S. tax code. Whereas IRAs are self-directed, 401(k)s are employer-sponsored. The best part about both types of 401(k)s is the employer match. Some employers will contribute to your 401(k) through matching programs which is not only free money, it increases the contribution limit to this account each year. If your job offers it, you should ALWAYS max out matching programs. For the 2023 tax year, the contribution limit is $22,500 per year and if combined with an employer match, the contribution limit is $66,000 per year.

Roth 401k

The Roth 401(k). You make after-tax contributions, but you get tax-free earnings and tax-free withdrawals in retirement.

Solo 401k

If you’re self-employed or you own your own business, the Solo 401(k) is a great way to put money away for retirement. The Solo 401(k) is essentially a 401(k) that you set up and manage yourself. There’s even a Solo Roth 401(k) option as well. As long as you’re self-employed and you have no other full-time employees (other than a spouse), you qualify for a Solo 401(k). In 2023, you can contribute up to $66,000 per year to a Solo 401(k).

Individual Retirement Account (IRA)

These are tax shelter accounts that allow you to save for your retirement. There are a couple other types of IRAs, but for our purposes we will focus on Roth and Traditional. Whether you have a traditional, Roth, or both, the contribution limits for the 2023 year are $6500 total. Because they're intended to help you save for retirement, the IRS doesn't want you to withdraw any funds from them before you turn 59½. And to enforce that, you'll owe a 10% penalty on the amount you withdraw early, along with income taxes. The only exception to this is if you’re a first time home buyer - you can withdraw up to $10,000.

Traditional IRA

A Roth IRA allows you to use post tax dollars, meaning you won’t pay taxes on withdrawals once you retire.

Roth IRA

A traditional IRA allows you to use pre-tax dollars, meaning you will be taxed on withdrawals once you retire. IRA retirement age is 59 ½.

Health Savings Account “HSA”

HSAs combine all the tax benefits of Traditional IRAs and Roth IRAs in one. Pre-tax contributions, tax-free earnings, and tax-free withdrawals. The only caveat is that the withdrawals need to be for health-related expenses. 

You can buy stocks, bonds, and mutual funds in your HSA just like you would in any other investment account. That way, you can put your HSA money to work until you need it. After age 65, you can withdraw your HSA money for any reason - health-related or not. You will, however, incur full income taxes on those withdrawals.

To qualify for an HSA, you must be on a health insurance plan that allows you to have an HSA. Check with your insurance provider to see if your plan qualifies you for an HSA. If your plan doesn’t allow HSAs, then consider switching to one that does.

Income Limits: 

There are no income limits for an HSA

Contribution Limits: 

The 2023 contribution limit is $3850.00 total for self only coverage.

The 2023 contribution limit is $7,750 for family coverage.

Non-Retirement Brokerage Account

There are no limits on a non-retirement brokerage account. This is an account you can use to invest in ETFs, mutual funds, individual stocks, and more.

Financial Services/Investment Management Companies

These are companies that are designed for individuals who wish to do their own investing. It doesn’t matter which one you choose, in our group, we will reference Vanguard most frequently. There’s no reason to pay a broker to manage your money. These companies give you everything you need to gather information and make your own decisions about managing your money. 

Here are 3 reputable choices:

Stash is another option. Stash allows you to invest small amounts of money (starting at $1) in stocks and ETFs; less than the total share price. You will not be able to invest in mutual funds thru Stash, only ETFs or stocks. Stash carries a base fee of $1 a month for the beginner plan. For accounts over $5000, they charge a 0.25% fee. This is a great way to practice trading ETFs (or stocks), without having to buy whole shares.

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