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Originally Posted by RunKC
Wouldn't it just be better to increase my 401k monthly payment than invest in stocks?
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Multiple thoughts on this and no right way is the best answer for everyone.
First determine if you like the funds offered in your 401k. Determine the expense ratios of the funds offered and if there are also employer 401k fees as well. If you don't like the funds offered, consider doing something else with your money such as maxing out your ROTH IRA into funds of your choosing.
People in high tax brackets generally like decreasing their income tax by increasing their 401k contributions for the year. This depends on if your state has income tax, as something like 10 do not. If your goal is to pay less taxes, increasing your 401k is a good option for many.
Some in your situation would say investing in individual stocks is another way to diversify and is much more liquid that placing money in a 401k. Mind you, this doesn't have to be individual stocks either but could be indexes, mutual funds or ETFs that track a sector of the market. These are generally less risky than owning individual stocks outright. If you don't have a large emergency fund to tap if times get tough or you were hit with a large bill, withdrawing 401k money comes with an early withdraw penalty plus paying capital gains tax (ouch!). That's why withdrawing 401k money should be one of the last options for those in desperate need of money. If money was instead invested in a brokerage account, you could sell those stocks at any time to access the money, either paying capital gains tax for winners or getting a tax break for losers. Either way you slice it, this money is easily accessible at any time though.
Hope that helps!