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re: Emergency fund opinions
Posted on 2/12/13 at 10:21 am to Teddy Ruxpin
Posted on 2/12/13 at 10:21 am to Teddy Ruxpin
A mathematical argument can definitely be made for using the Roth for an emergency fund in this way. My point is that if it is done regularly, the odds of missing out on contribution opportunity are pretty high. Not to mention if >5500 is withdrawn, the total cannot be replaced in a single tax year. IMO an IRA is a retirement account and should be treated like one.
I didn't even mention that the 5k contribution you put in could easily be worth 3k when you might have an emergency, in your scenario. The investment vehicles used for Roths and Em Funds should be completely different.
I didn't even mention that the 5k contribution you put in could easily be worth 3k when you might have an emergency, in your scenario. The investment vehicles used for Roths and Em Funds should be completely different.
1
Posted on 2/12/13 at 10:31 am to Sigma
I would hope that someone isn't having an emergency every year. Either they are very unhealthy, have something else going on, or have the worst luck of all time.
Obviously, if you get a market downturn AND an emergency in year 1 that would obviously suck.
However, if you are building a substantial Em Fund over a few years, I would think that risk goes down in each year, as you contribute more dollars to the fund.
But I will say that it probably isn't for every one, even if the mathematical odds favor doing so.
Obviously, if you get a market downturn AND an emergency in year 1 that would obviously suck.
However, if you are building a substantial Em Fund over a few years, I would think that risk goes down in each year, as you contribute more dollars to the fund.
But I will say that it probably isn't for every one, even if the mathematical odds favor doing so.
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