Would you use your Roth IRA account as your savings account?

Question

A regular savings account only gives you a certain percent of interest. However, a ROTH IRA account gives plenty of interest because it's basically a porfolio filled with mutual funds, bonds, and other investments. How many people do the same or use some other form of high interest for their savings account like a Money market account instead of a regular savings account. Anything is better than a regular savings account, Do you agree?

Answer 1

I would not recommend it .... a Roth IRA is for your retirement and beside it has limitations too when you can actually take money out of it other wise you get taxed on early withdraw ls too it... If you are wanting just a regular savings account that pays you I would recommend that you open one up at www.ing.com... it can be directly linked too your checking account it pays a pretty decent monthly interest of around 4.35%...pluse you have better access to with-drawling your money if you were to need it...it lets you make up too six with-drawls a year...and there is no minimum too how much you have too have in there....plus as an added bonus if you have someone who has an account there refer you and you open up an account with a deposit of $250.00 you receive free after a month $25.00.

Answer 2

I agree that anything is better than a regular savings account. I use paypal money market as a savings account; it pays 4.9% interest, there is no balance minimum, and I can switch money back and forth to my check account at anytime with no penalty (using the "ach transfer").

The Roth IRA does not give a higher interest rate than any other investment account, since in either case you can invest in whatever you want.

The Roth IRA is a RETIRMENT saving account with tax advantages. It doesn't substitute for a regular money market account, since you cannot loan yourself money from an IRA account. You can withdraw your contributions (but not capital gains or dividends) without penalty, however. So you can use a high percentage of the IRA funds in case of emergency. I've also heard that you can use your Roth IRA funds for the down payment for your first home.

Answer 3

Use the Roth IRA if you are saving the funds for large savings goals (emergency fund, down payment on a house). I wouldn't advise so for short term savings goals, as you may be hit with short term losses.

Whatever you deposit into your Roth IRA you may withdraw TAX/PENALTY FREE!!! Do not be afraid of the tax penalty. You are only taxed for withdraws of market returns.

For example,
I deposit $5,000 into my Roth IRA (which is composed of stock and bonds)
In 1 year (without depositing anything further) the balance is $5,120
I can safely withdraw $5,000 penalty free.
I will not withdraw the $120 earned from market gains because I want to avoid the fee.

You can use your IRA as a savings account as long as you only withdraw the amount you put in, nothing more. Also, I would make as few withdraws as possible. An IRA is not something you should dip into for $5-$250 purchases. Like I said, long term, expensive savings goals (down payment on a house) work fantastic.

Answer 4

get the roth IRA. As far as savings and for short term just-in-case money, just get a money market savings account. it will pay higher interest rates. keep maximing your roth IRA and continue to contribute to your money market savings. if you reach a point in your savings where you think that should be sufficient for an emergency, try to invest your new savings into something else like mutual funds or maximize your 401k

Answer 5

If you're looking at liquidity, then stick it into a high yielding money market fund, or a short term cd and ladder the amounts differently, like 3 months, 5 months, etc... A roth is for retirement & long term savings, so if you have extra money.. put it in a roth, because that money grows tax free when you retire and in the end, that's a pretty good deal. or give me the money and i'll waste it for you! Invest it wisely! lol : ) good luck my friend! Email me at [e-mail] if you want.

Answer 6

I believe in putting money in a lot of different places, including savings accounts because if you ever get into a bind, the funds are easily accessible and there is no penalty. I usually keep about 2 months salary in it, just in case.