Author Topic: Roth IRA in addition to Savings Account for short term goal?  (Read 926 times)

DangleStash

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Roth IRA in addition to Savings Account for short term goal?
« on: January 06, 2016, 11:48:11 AM »
I'm saving to buy a property, and have ~1.5 years before I'm at my goal.  I am parking my cash in an Ally Savings Account at 1%, but would also like to begin funding a Roth IRA.

My options are essentially no Roth this year, or putting the money into a Roth IRA savings account so that it is accessible/has no market risk.

I do not plan to touch the money, but want to be able to if something comes up (better opportunity property, fixer upper that needs more work, etc).

Does it make sense to fund the Roth Savings now, just so that the money is classified as Roth?  This way if I don't end up needing it, I can roll the entire account into an investment Roth IRA later, instead of starting from scratch.

Thoughts?

Jack

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Re: Roth IRA in addition to Savings Account for short term goal?
« Reply #1 on: January 08, 2016, 08:45:11 AM »
Withdrawing principal from a Roth in order to buy something in the short-term is a bad idea because you aren't allowed to put it back and thus lose out on the long-term growth potential.

However, if the probability of withdrawal is less than 100% then that's still better than failing to fund the Roth in the first place.

My advice would be to go ahead and fund the Roth, go ahead and invest within the Roth now, not later, and forget about using that principle in the short term unless some kind of extremely awesome deal comes up (e.g. a 2008-like scenario).