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12-29-2022, 08:03 AM | #13201 |
Mod Team
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Have a ROTH IRA question.
I've been maxing my ROTH for a few years now but after numerous large house projects needing to be completed in the past few years (new roof, new AC units and this year a pool remodel) all which were paid for in cash, I am going to be a few $k short on maxing my ROTH while I build our emergency savings back. However, a post about someone contributing to a ROTH for 15 years and not realizing they needed to actually pick funds with their contribution, while it simply say in a money market account got me thinking (Wow, that's bad understanding!!!). ROTH contributions can be withdrawn at any time right? So why can't I take the few thousand I'm missing to max this year and just put it in the money market account part of the ROTH and treat it like liquid savings? If I end up needing it, can I choose these funds in the money market account to withdraw or is it required I sell an investment to withdraw? Does anyone know how withdrawing funds from a ROTH works as far as choosing where that money comes from in the account? |
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12-29-2022, 09:22 AM | #13202 | |
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I think what you have to do is sell a fund so it goes into the money market or whatever idle account, and then ACH it to your checking account. I wouldn’t do it though. If you take funds out and it moves up 10% over the year while, you won’t be participating in that portion. Whereas if the run up starts now, you’d miss out on quite a bit. If you’re talking about 6 months, it probably doesn’t matter. I wouldn’t pull it out until you needed the money that isn’t in your emergency account. |
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12-29-2022, 09:57 AM | #13203 |
Politically Incorrect
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I see a rally for the 1st quarter of 2023.
Pessimism all over and tax selling done. Too much money on sidelines with so many stocks beaten down into oblivion.
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12-29-2022, 11:10 AM | #13204 |
Fish are scared of me
Join Date: Nov 2001
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I read a good random thought the other day:
If you're going to buy a $50,000 car and want to pay cash to avoid interest that's fine At the end of 5 years you have a car that's worth $20,000 that fully paid for If you instead put $50,000 into a stock paying a monthly dividend at 8% and use the dividend to make a loan payment on the car then at the end of 5 years you'll have your $20,000 car paid for and $30,000 left in your stock investment for a total of $50,000 Paying cash for shit might not always be the best thing to do |
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12-29-2022, 11:59 AM | #13205 | |
Starter
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12-29-2022, 12:35 PM | #13206 | |
Mod Team
Join Date: Sep 2011
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Quote:
So while my emergency fund needs built back a bit to my normal level, I feel like not maxing my ROTH this year is a bad idea just to put my emergency fund where I want it, even though I can withdraw on a ROTH if needed almost like an emergency fund. I hope I'm making sense. |
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12-29-2022, 12:39 PM | #13207 | |
Mod Team
Join Date: Sep 2011
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Quote:
Dividends are paid off the stock price. So getting an 8% dividend is not like it's extra cash. After a stock goes ex-dividend, the share price typically drops by the amount of the dividend paid to reflect the fact that new shareholders are not entitled to that payment. So while you're getting a "dividend," you capital tied up in the share price is dropping too. Couple that with a stock that still changes value like any other stock and that $50k you put in this year, could easily only be worth $30k just from a bear market alone. Too many people think dividends are free money, and most are not. |
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12-29-2022, 12:55 PM | #13208 | |
Cheat Death
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Quote:
The Roth IRA as an Emergency Fund The advantage of putting emergency savings into a Roth IRA is that you don’t miss the limited opportunity to make that year’s retirement contribution. You can only contribute a few thousand dollars to a Roth IRA each year, and once a year passes without a contribution, you lose the opportunity to make it forever. However, accessing these funds should be your last resort... The part of your Roth IRA contribution earmarked as your emergency fund doesn't belong in stocks, bonds, or mutual funds like a typical retirement contribution. It belongs in a liquid account (meaning cash or something that can easily be converted to cash and that earns interest) that can be withdrawn from at a moment's notice without losing principal. Last edited by KCUnited; 12-29-2022 at 01:07 PM.. |
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12-29-2022, 01:08 PM | #13209 | |
Mod Team
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Quote:
I'll max my contribution this year but leave the chunk I'm putting in now in a money market fund until my actual emergency savings is back to level. When it gets there, this chunk will get invested. |
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12-29-2022, 01:24 PM | #13210 | |
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12-29-2022, 02:02 PM | #13211 | |
TACO SALAD
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Lew,
Yeah, that makes sense. Depending on your broker, you may need to choose a money market fund or they may default free cash into one. Vanguard defaults to a good one, Schwab puts me into a cash account that pays nothing but you can buy SWVXX or one of the others and get 4% interest or so Quote:
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12-29-2022, 02:03 PM | #13212 | |
Fish are scared of me
Join Date: Nov 2001
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Quote:
Keep in mind it's 7.4% yearly but pays monthly which gives you an advantage in compounding. |
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12-29-2022, 02:45 PM | #13213 | |
Fish are scared of me
Join Date: Nov 2001
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Quote:
I'm interested in what you say about the price action of a dividend stock dropping when a dividend is paid. That's interesting. Seems like there would be no point in owning a dividend stock. My daughter invested $3200 in MAIN exactly 2 years ago and the value now is $4181. ETRADE says her gain is 12.56% Thats 30.65% increase by my calculation 3200 to 4181 . What am I missing? |
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12-29-2022, 03:58 PM | #13214 | |
Seize life. Be an ermine.
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VARSITY
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12-29-2022, 04:07 PM | #13215 | |
Fish are scared of me
Join Date: Nov 2001
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Quote:
Her initial purchase was 100 shares at 31.962 on 1/6/2021 So why don't they calculate the dividend reinvestment into the end result ?? STUPED computers! |
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