re: Roth IRA vs Traditional Savings Account

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Why wouldn't I just put all $20k into the Roth

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For starters, there is a max amount you can contribute. I think the point you are missing is you are losing time in the market when you pull from it. Let's say you need a couple of thousand, decide to sell the XOM in your Roth, and cannot replace the money for a year. In the meantime, XOM has went up 10% and paid their 2.73% dividend for the year. Not only are you out the couple of thousand, you lose roughly %12 for pulling it out.

Since we know you are not talking about minor expenses, it may work best for you. It all comes down to what helps you sleep at night. For me personally, having 6 months expenses sitting at a local bank that I can move within minutes gives me a good night sleep.

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I guess now, I will max out the Roth, then take whatever savings over $5500 for the year and use that to keep at my local bank.

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Then, when you feel like the savings at the bank has gotten to a comfortable level, you can invest any extra on your own! Win-win-win!

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I guess now, I will max out the Roth, then take whatever savings over $5500 for the year and use that to keep at my local bank.

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The other thought process is that if you have a major expense when the market makes a downturn, and you need access to your Roth money while the market pulls back, you could end up taking the cash out at a lower value than what you put it in at. That's why most of the experts say have 6-9 months living expenses available in a liquid (cash) account. You would have more time in that scenario to try and find a better price to see your Roth assets at if you have to liquidate them.

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How do you guys choose what money goes where? I believe I read in one of the threads here on MT that for smaller amounts of $$$ in a Roth, just put it into one fund (for lack of a better term).

How do you guys decide where your Roth money goes? What type of fees should I expect (if any)?

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A lot more complex question than you probably realize

Depends on your account objective, risk tolerance, time horizon. I know many here put their stuff in different target date funds.

As far as fees, it all depends on the different funds, who the account is with, etc...

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Honestly, barring some insanely, apocalyptic event where I would need every penny of my finances, my Roth would remain untouched.

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Yes, however without knowing your age, your time horizon to retirement could be 15,20, 30 years. All would/could change investment objectives.

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Since I'm young, my risk tolerance is high. (As I've also read/been told that at a younger age, you need to be more aggressive within the market)

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While I agree, do a risk profile, i'm sure you can just google one. Never assume, and there are varying degrees of "high risk tolerance". I have plenty of clients who are pretty young, but cannot handle a bunch of risk and volatility in their investments. I have some very old clients who are still very aggressive with their investments, sometimes against my advice

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To me, my stance remains, just seems like a lot of work for small, one-time expenses.

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Mine too, but I don't use a Roth for those piddling things either. I just make sure my checking account has a bit extra to take care of that sort of thing. Savings accounts just don't pay enough extra over regular checking to be worth fooling with.

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$5500 into the account before the tax deadline for the 2013 tax filings, then obviously another $5500 into the account that will be for the 2014 tax year filing, correct?

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yes just need to get the 2013 $5500 in before the deadline. When I put money in my Vanguard, it let's me pick what year I'm contributing to until I max a year out.

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$5500 into the account before the tax deadline for the 2013 tax filings, then obviously another $5500 into the account that will be for the 2014 tax year filing, correct?

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After5 years I think