Author Topic: Alternate options to a savings account  (Read 1507 times)

catfive899

  • 5 O'Clock Shadow
  • *
  • Posts: 1
Alternate options to a savings account
« on: July 31, 2015, 09:18:21 PM »
Currently I have money sitting in a savings account earning practically nothing.  Based on posts from this blog, I am interested in placing that money in a Vanguard Total Stock Market Index Fund.  This is money that will be used for early retirement income, but I would like to be able to withdraw funds if needed.  If I place the money in this fund, would I be able to withdraw without penalty if the need comes up?  Any advice or direction is greatly appreciated.

MDM

  • Walrus Stache
  • *******
  • Posts: 9245
Re: Alternate options to a savings account
« Reply #1 on: July 31, 2015, 09:45:13 PM »
Currently I have money sitting in a savings account earning practically nothing.  Based on posts from this blog, I am interested in placing that money in a Vanguard Total Stock Market Index Fund.  This is money that will be used for early retirement income, but I would like to be able to withdraw funds if needed.  If I place the money in this fund, would I be able to withdraw without penalty if the need comes up?  Any advice or direction is greatly appreciated.
catfive899, welcome to the forum.

The short answer is "yes, if you put it in a taxable or Roth account."

For a more detailed answer, we'd need a little more information.  E.g., how much time between now and when you expect to withdraw; type of account (traditional or Roth retirement or taxable); risk tolerance (e.g., how problematic would it be if your investment loses money?); etc.

For a full blown answer, see http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-%27case-study%27-topic/.

KittyCat

  • Stubble
  • **
  • Posts: 242
  • Age: 29
  • Location: CA, USA
Re: Alternate options to a savings account
« Reply #2 on: August 01, 2015, 01:01:05 AM »
catfive899, welcome to the forum.

The short answer is "yes, if you put it in a taxable or Roth account."

For a more detailed answer, we'd need a little more information.  E.g., how much time between now and when you expect to withdraw; type of account (traditional or Roth retirement or taxable); risk tolerance (e.g., how problematic would it be if your investment loses money?); etc.

For a full blown answer, see http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-%27case-study%27-topic/.
I'm still very new to this, but if the TC wants to stash money away potentially as a retirement fund while still being able to dip into said funds, wouldn't something like a mix of RothIRA and an investment account work?

MDM

  • Walrus Stache
  • *******
  • Posts: 9245
Re: Alternate options to a savings account
« Reply #3 on: August 01, 2015, 01:12:08 AM »
The short answer is "yes, if you put it in a taxable or Roth account."
...wouldn't something like a mix of RothIRA and an investment account work?
The above answers appear identical, unless I'm missing something...?

KittyCat

  • Stubble
  • **
  • Posts: 242
  • Age: 29
  • Location: CA, USA
Re: Alternate options to a savings account
« Reply #4 on: August 01, 2015, 01:21:43 AM »
The above answers appear identical, unless I'm missing something...?
Ah, then it was probably me who misunderstood. After re-reading, I see that your mention of risk tolerance part covers that; it just wasn't clear to me at first. Oops, carry on!