Can You Use a Roth IRA as Your Emergency Fund?
If there's one thing the coronavirus pandemic has taught us, it's that it's important to have extra money on hand at all times. That way, if you lose your job or encounter an unplanned expense your paycheck can't handle, you can dip into your cash reserves and avoid going into debt. You can also avoid a scenario where you feel compelled to liquidate investments and lose out on added growth, or worse yet, lock in a permanent loss when the need for money arises.
As a general rule, it's a good idea to keep about three to six months' worth of living expenses tucked away for emergencies. And you'll often hear that you should keep that money in a savings account.
But that poses a problem. Given what savings accounts are paying today in interest, leaving that much cash in one could mean denying yourself much more generous returns. And if that doesn't sit well with you, you may be considering finding another home for your emergency fund, like a Roth IRA.
Source Fool.com
