June 12, 2013
What are some of the ways the funds in a Roth IRA can be used without paying early withdrawal penalties?
What are some of the ways the funds in a Roth IRA can be used without paying early withdrawal penalties?
You can use it as a college account for your children, a down payment account for your home purchase, an emergency account for your family, or as a retirement account.
Well said, Katherine. By starting a Roth IRA at a place like Vanguard.com you can save your money into this tax deferred and quite possibly tax free investment account. There are specific rules that you must follow if you choose to use the account for emergency savings, a home purchase, college, or even retirement. You can go here:https://investor.vanguard.com/what-we-offer/iras/traditional-iras-and-roth-iras to learn more on the subject. BIG POINT: If a Roth IRA is your only retirement account, DO NOT use it for anything other than retirement. DO NOT steal from your future. Only use the Roth IRA for other purposes when you already have a company retirement plan at work (pension, 401K, 403b, 457, TSP, etc.)
What should you invest in within the account? Focus your efforts on index funds and target date funds that contain index funds that fit your risk tolerance (at what point will you freak out and sell when markets are down), your goals (what are you going to use the money for), and finally, your time horizon (when will you need the money). After factoring in these issues, educate yourself, and then take ACTION!
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