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Message
re: Roth IRA vs Traditional Savings Account
Posted on 2/3/14 at 12:28 pm to dcrews
Posted on 2/3/14 at 12:28 pm to dcrews
First,
Second, the reason I have money in a "savings" account if you will, is solely for emergencies. I can literally make a couple of clicks from a computer or phone, and have money from my "savings" into my checking if shite was to hit the fan or I needed it. Pretty sure you could not do that from a Roth.
Aside from my "savings" account, which is an emergency fund, all of my other savings are tied up in investments.
quote:
I am certainly not an investing guru nor am I extremely savvy when it comes to stocks, bonds, mutual funds, etc... (yet)
Second, the reason I have money in a "savings" account if you will, is solely for emergencies. I can literally make a couple of clicks from a computer or phone, and have money from my "savings" into my checking if shite was to hit the fan or I needed it. Pretty sure you could not do that from a Roth.
Aside from my "savings" account, which is an emergency fund, all of my other savings are tied up in investments.
2
Posted on 2/3/14 at 12:37 pm to OnTheBrink
quote:
Second, the reason I have money in a "savings" account if you will, is solely for emergencies. I can literally make a couple of clicks from a computer or phone, and have money from my "savings" into my checking if shite was to hit the fan or I needed it. Pretty sure you could not do that from a Roth.
How long would it generally take to get the contribution portion of your Roth back into a checking account for emergency use?
Your reason makes sense for immediate emergencies. But let's say I need to have a vehicle repaired or something comes up where I don't necessarily need the money right this second but in a few days or a week from now. I can't imagine it takes too long to have that money transferred from a Roth into a checking account. (obviously I could be very wrong)
quote:
Traditional savings?
Roth is a tax advantaged account. Tax free growth in it as long as you follow the rules
Right, this is what would make me think it makes more sense to have the Roth than the traditional savings. If I need the money for something, I can just pull it out (transfer) like I would if I had a traditional savings account.
This post was edited on 2/3/14 at 12:38 pm
Posted on 2/3/14 at 1:28 pm to OnTheBrink
quote:
I can literally make a couple of clicks from a computer or phone, and have money from my "savings" into my checking if shite was to hit the fan or I needed it. Pretty sure you could not do that from a Roth.
Actually, you can provided your Roth is with the same institution as your checking account. Or at least I can at Schwab.
That said, for small stuff (like a couple hundred to fix my car, etc.) I just put it on my credit card and pay it off at the end of the month. If I'm constantly tapping an emergency fund it probably means I'm using it for more than real emergencies.
But yes, I go with the Roth >>> savings account. In the early years the tax advantage doesn't much matter but it does build with time.
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