Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[lewdog]

Originally Posted by Nightfyre

I don't believe you can withdraw contributions penalty free, as any withdrawal from a Roth is a distribution. So if not a qualified distribution, it would be subject to the 10% penalty, though not taxes unless you got through all your contributions.

https://www.irs.gov/publications/p59...link1000231061

You can withdraw your contributions tax free (since you paid taxes on that money already) at any time after 5 years from your initial contribution. You get taxed a penalty if you withdrawn your gains, however.

Copied from your link:

A qualified distribution is any payment or distribution from your Roth IRA that meets the following requirements.

It is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, and

[Nightfyre]

Originally Posted by lewdog

You can withdraw your contributions tax free (since you paid taxes on that money already) at any time after 5 years from your initial contribution.

But not penalty free.

I stand corrected. Contributions over five years are penalty and tax free.

[lewdog]

Originally Posted by Nightfyre

But not penalty free.

I stand corrected. Contributions over five years are penalty and tax free.

Read the link I posted. I see no one making mention of any penalty on contributions, which is why people are doing this.

[lewdog]

Originally Posted by Nightfyre

But not penalty free.

I stand corrected. Contributions over five years are penalty and tax free.

LOL. Ok. I wasn't sure but that's what I am reading.

Some people are parking some extra money, in something like a short term bond fund or money market in hopes of gaining a bit of tax free money but also something low risk with fairly immediate access to cash in an emergency. People are claiming this is in addition to a taxable emergency fund such as a savings account which generates little interest but is also taxed. Build this small emergency fund in your Roth to something like an extra $10k over the duration of a few years and then start putting your entire yearly contribution into a Roth back to all retirement funds. Gives you a little bit of extra liquidity without being taxed if you had to touch it later, with the hope that you don't have to.

I guess that's the point?

[DaFace]

Originally Posted by lewdog

Wanna know how many here use their Roth also as an emergency savings vehicle like this article suggests since contributions can be withdrawn tax/penalty free? I see this posted a lot lately and it makes sense for many I would think after you have a savings account emergency fund but still wanna have an option to stay relatively liquid without parking in a savings account and getting nothing. Any of you do this? What kind of funds do you use?

https://blog.mint.com/saving/does-us...d-idea-052012/

Eh, kind of. I still keep a healthy emergency fund in savings, but when I have considered if I should go even higher, the fact that a Roth is sitting there if things got REALLY bad has kept me from doing it.

[Nightfyre]

Originally Posted by lewdog

LOL. Ok. I wasn't sure but that's what I am reading.

Some people are parking some extra money, in something like a short term bond fund or money market in hopes of gaining a bit of tax free money but also something low risk with fairly immediate access to cash in an emergency. People are claiming this is in addition to a taxable emergency fund such as a savings account which generates little interest but is also taxed. Build this small emergency fund in your Roth to something like an extra $10k over the duration of a few years and then start putting your entire yearly contribution into a Roth back to all retirement funds. Gives you a little bit of extra liquidity without being taxed if you had to touch it later, with the hope that you don't have to.

I guess that's the point?

You can invest it in the stock market as well. That said, I would rather keep my Roth contributions protected and earning moar tax free gains, so maintaining some healthy savings balance seems prudent.

[lewdog]

Originally Posted by DaFace

Eh, kind of. I still keep a healthy emergency fund in savings, but when I have considered if I should go even higher, the fact that a Roth is sitting there if things got REALLY bad has kept me from doing it.

I am where you are at mentally. We have a good chunk sitting in savings for emergencies, 6 months roughly. I keep thinking it should be higher but we also don't max our Roth's yet. I am wondering if I should take an extra $2k at the end of the year and max out our Roth's into a low risk fund like they are suggesting for a bit added emergency funds?

[lewdog]

Originally Posted by Nightfyre

You can invest it in the stock market as well. That said, I would rather keep my Roth contributions protected and earning moar tax free gains, so maintaining some healthy savings balance seems prudent.

Yea, having access to stocks is a different animal for what I am talking about. As you are aware, you'd hate for an emergency to happen and you have to sell stocks when they are sitting low.

Did you spell moar like that trying to troll me?

[Discuss Thrower]

I invested roughly $300 in blackjack and roulette this weekend. Get at me.

[Buehler445]

I don't. I have a pile of cash parked in the bank because I'm a bad manager at the moment. I really need to get my books done and do all my inter-entity reimbusements done and tighten things up.

But again, bad manager at the moment.

[Demonpenz]

must be nice to be rich

[LoneWolf]

Mo money, Mo problems.

[Nightfyre]

Originally Posted by lewdog

Yea, having access to stocks is a different animal for what I am talking about. As you are aware, you'd hate for an emergency to happen and you have to sell stocks when they are sitting low.

Did you spell moar like that trying to troll me?

You know I live to troll.

[wutamess]

Well... I've come to the realization that other than a layoff, having to take an emergency trip or pay for a funeral (Which I just paid for my fathers), I just don't need much more than $2000 in savings.

I keep $2-3K in savings/emergency account, then max out ROTH IRA contributions as it's a secondary savings and then the rest goes to an out of pocket/regular investment account. The 6+ months emergency fund is in the Roth IRA since withdrawals aren't taxed or penalized (which I've never had to draw on).

Is any of this a bad idea?

[Buehler445]

Originally Posted by wutamess

Well... I've come to the realization that other than a layoff, having to take an emergency trip or pay for a funeral (Which I just paid for my fathers), I just don't need much more than $2000 in savings.

I keep $2-3K in savings/emergency account, then max out ROTH IRA contributions as it's a secondary savings and then the rest goes to an out of pocket/regular investment account. The 6+ months emergency fund is in the Roth IRA since withdrawals aren't taxed or penalized (which I've never had to draw on).

Is any of this a bad idea?

I'd keep more out than that. Engine/transmission, HVAC, roof leaks, etc will cost you more than that and getting loans out on that shit is sketchy.