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re: What's a "normal" amount of money for a late 20s person to have in savings?
Posted on 7/26/13 at 9:41 am to WG_Dawg
Posted on 7/26/13 at 9:41 am to WG_Dawg
quote:
I don't have any idea how to do go about this.
A couple of ways come to mind.
1) Open a Roth, invest at least something in bonds or bond funds. If an emergency happens, pay for it up front with a credit card. Then withdraw from the Roth (there's no penalty so long as you don't withdraw more than you put in) to pay the CC bill in 30 days so you don't have to pay interest.
2) If your Roth is already maxed, open a brokerage account and do the same thing.
Either way, you can tilt more to equity investments once you have enough to meet the minimum emergency stash.
ETA: This is another way how responsible use of a credit card is wonderful. Here, it buys you 30 days of time to liquidate an investment that pays better than a savings account fund or a CD.
This post was edited on 7/26/13 at 9:43 am
3
Posted on 7/26/13 at 9:44 am to foshizzle
I know you can probably open a Roth online, but can I just go to my bank and do it there? Since all this is new (the only investment type account I have is my retirement through work) I'd prefer to actually talk to someone face to face as I get started.
Posted on 7/26/13 at 9:45 am to foshizzle
quote:
Then withdraw from the Roth
You don't mean Roth IRA, do you? I thought you had to wait 5 years before you could withdraw without penalty? Or is that just on gains?
ETA: Checked again, it's just on earnings. Any contribution amount can be withdrawn tax/penalty free. I should have already known this, but
anyway.This post was edited on 7/26/13 at 10:08 am
Posted on 7/26/13 at 9:50 am to foshizzle
That's an interesting strategy - Wasn't aware there were no penalties on a Roth. Are there any other advantages to this other than tax savings, as opposed to doing this with a normal investment outside a 401k?
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