An Emergency fund is an important piece for you finances. But if you are building your emergency fund, should you use your Roth IRA as an emergency fund? Or should you go the traditional route and keep cash? Now if you aren’t prepared for an emergency, then it can derail you on your goal of financial freedom, or just put you in a really tough situation. And if you are looking how to build your emergency fund, I also give you some tips to make the easier.
00:00 – Start
00:26 – Importance of Emergency Fund
00:47 – How Much Should You Have?
2:24 – Key Piece
2:45 – Use Roth IRA as Emergency Fund?
4:34 – Risk Using Roth IRA
5:50 – Should you Roth As Emergency Fund?
6:22 – How I handle my Emergency Fund
7:16 – Complementary Approach
8:17 – Tips To Build Emergency Fund
9:31 – Final Thoughts
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14 comments
Emergency fund? The only emergency I have is not having access to 20x leverage to yolo on GME
🙌🏾
Great video thanks
I advise to my F&F, when building an Efund start by putting it into your roth. When you max out the roth, start building an actually Efund.
In my opinion, you should generally have a good emergency fund before investing. However, I think it's OK to double the Roth as an emergency fund your first year investing. I did this when I first started because I didn't have enough to invest to get to the Roth contribution limit. I quickly built my emergency fund back to where it needed to be. The Roth is too powerful to take money out!
I'v never tried to take my contributions out of a Roth IRA, but I feel like it wouldn't be a fast process. That alone makes me feel like it wouldn't be a good emergency fund.
My emergency fund s 1. I have 4 months in cash (yotta savings), 2. Pull from my monthly ETF funds and individual soicks with dividends 3. Roth IRA ( nuclear option) as well as liquidating other funds.
I feel like it varies for different people. For myself, definitely no due to the fact I can't afford the penalties nor have savings for 1 year. In Seattle, 1K is not enough for emergency fund. I need at least 10K in savings for 1 year emergency due to many high taxes in Washington state. Still in the process of purging my final student loan – which is $5,800 left. That last student loan is the only reason why I'm not investing as much, but will start being aggressive in my ROTH IRA once that student loan is gone! Great video as always 😀
Great credit is the ultimate emergency fund boiz.
Dustin, another outstanding video! I’m a finance guy by trade and you are spot on with 3- 6 month emergency fund and a year is even better. People don’t realize that time goes quickly. Using a Roth IRA is smart, but you need to be very discipline.
Great video Dustin. We use cash for our emergency fund and wouldn't really even consider our Roth IRA. I think we might try to find a high yield savings account to put the emergency fund in. Whats the highest you've seen nowadays and where? Take care man and keep the family safe!
My strategy right now is split between a local savings account and a Citi Accelerate account that i opened at 1.85% (it's now at 0.5% i think). I don't have a roth IRA but I'm looking to start one here and explore all the opportunities and advantages. Only been using a 401k for retirement.
just as i'm switching to learning about investments, retirement, etc. my #1 credit card dude is putting out videos of the same sort. 😛🤙
Great content.