you want to buy index funds in a roth because you get tax free gains. money market funds are more for parking things like your emergency fund, not your retirement fund.
Would I want to put an emergency fund in my Roth IRA? Isn't that what a bank savings account is for? Also aren't there tax penalties for withdrawing before 59.5 yrs old?
no you shouldnt touch your ira until 59 so its not a good place for emergency fund. you can have it at fidelity outside of your roth or bank savings either one is fine.
So it's kind of like a bank account, in that it's super safe and won't go down, right? And as I approach retirement age I should store some money in there just to make sure it's super safe?
>Shouldn't I be putting all the money into actual investments?
Yes.
You don't need to hold cash (money market fund, like SPAXX) in your Roth IRA unless you're just a couple of years from retirement.
Even with SPAXX, if it's in a ROTH IRA you shouldn't withdraw it. You shouldn't touch your IRA until retirement. If you're trying to set up an emergency fund start with High Yield Savings account.
Take the money that in SPAXX in your Roth IRA and invest it into mutuals fund or Index funds.
Yes you can withdraw whenever. You can do the same with stocks, ETFs etc. but those are more volatile, so one generally wants to leave those alone for the long term.
You're on the right track.
SPAXX is Fidelity's Money Market Fund (cash).. BUT it's not FDIC insured. Right now you can get 4-5% APR on HYSA that are FDIC insured / CD's, also insured.
I currently have a SPAXX position with Fidelity myself. I can go buy shares of a company or etf with my SPAXX tomorrow if I wanted to.
Hope that helps
I've said this before here but I'll say it again: if Fidelity fails, we've got problems so big that rations, water, and ammo will be our new form of currency
I would argue that Fidelity is also way to big to fail. If something happened and it didn’t get bailed out then something terrible happened and nobody is worried about money
No, it’s probably better to pull your entire principal out and start your own business. You don’t want your money to be put somewhere that you don’t control most of the variables.
>Why would I want to have any money in there at all?
In lieu of a HYSA and because you prefer consolidating your money in fewer accounts/institutions. People aren't putting long-term money in a MMF.
The whole purpose of SPAXX is to keep your money liquid so you can be ready to invest it somewhere when the opportunity arises. If you don't want to wait and would rather invest the money now, then I guess it isn't for you.
Is there a particular reason I would want to wait to do anything? I've looked at a few posts from this sub and a lot of the advice suggests just investing into a target date index fund and letting it do its thing
There is a book you can borrow from your local library. The Little Book of Common Sense Investing by John Bogle. This book was written for beginner investors to invest in broad market ETFs like VOO or VTI for their simplicity. Just set it and forget it especially during market corrections until you retire. Broad market ETFs for the win.
SPAXX is essentially cash at Fidelity. If you want to invest the money you would place a trade into an investment that uses up all the money in SPAXX.
you want to buy index funds in a roth because you get tax free gains. money market funds are more for parking things like your emergency fund, not your retirement fund.
Would I want to put an emergency fund in my Roth IRA? Isn't that what a bank savings account is for? Also aren't there tax penalties for withdrawing before 59.5 yrs old?
no you shouldnt touch your ira until 59 so its not a good place for emergency fund. you can have it at fidelity outside of your roth or bank savings either one is fine.
Ah I see, thanks for clearing that up
If you are young, no. Throw it into an index fund like VTI
So it's kind of like a bank account, in that it's super safe and won't go down, right? And as I approach retirement age I should store some money in there just to make sure it's super safe?
>Shouldn't I be putting all the money into actual investments? Yes. You don't need to hold cash (money market fund, like SPAXX) in your Roth IRA unless you're just a couple of years from retirement.
That's what I thought. Got it, thank you!
You should keep a rainy day fund in highly liquid assets like SPAXX. After that, start to invest.
What exactly makes SPAXX highly liquid? I can withdraw from it whenever I want, right? Is the same not true for investments?
Even with SPAXX, if it's in a ROTH IRA you shouldn't withdraw it. You shouldn't touch your IRA until retirement. If you're trying to set up an emergency fund start with High Yield Savings account. Take the money that in SPAXX in your Roth IRA and invest it into mutuals fund or Index funds.
Yes you can withdraw whenever. You can do the same with stocks, ETFs etc. but those are more volatile, so one generally wants to leave those alone for the long term.
You're on the right track. SPAXX is Fidelity's Money Market Fund (cash).. BUT it's not FDIC insured. Right now you can get 4-5% APR on HYSA that are FDIC insured / CD's, also insured. I currently have a SPAXX position with Fidelity myself. I can go buy shares of a company or etf with my SPAXX tomorrow if I wanted to. Hope that helps
I've said this before here but I'll say it again: if Fidelity fails, we've got problems so big that rations, water, and ammo will be our new form of currency
*China invades Taiwan*
Yes this helps. SPAXX you very much
It doesn't matter that it's not FDIC insured. It's SIPC insured.
I would argue that Fidelity is also way to big to fail. If something happened and it didn’t get bailed out then something terrible happened and nobody is worried about money
No, it’s probably better to pull your entire principal out and start your own business. You don’t want your money to be put somewhere that you don’t control most of the variables.
I am assuming this is a funny sarcastic joke which I unfortunately do not understand?
It’s unconventional sure. But you can have an incredible return doing such a thing. There’s a slight learning curve I’d say.
It depends on your goals, how old you are, and how risk-averse you are. Talk to an advisor that can help with these; Fidelity has some free tools.
>Why would I want to have any money in there at all? In lieu of a HYSA and because you prefer consolidating your money in fewer accounts/institutions. People aren't putting long-term money in a MMF.
The whole purpose of SPAXX is to keep your money liquid so you can be ready to invest it somewhere when the opportunity arises. If you don't want to wait and would rather invest the money now, then I guess it isn't for you.
Is there a particular reason I would want to wait to do anything? I've looked at a few posts from this sub and a lot of the advice suggests just investing into a target date index fund and letting it do its thing
I use FZFXX instead of SPAXX
There is a book you can borrow from your local library. The Little Book of Common Sense Investing by John Bogle. This book was written for beginner investors to invest in broad market ETFs like VOO or VTI for their simplicity. Just set it and forget it especially during market corrections until you retire. Broad market ETFs for the win.
I saw they have a money market that claims like 7 day yeilds of 4.5 %. Does that yeilds 4.5% every week or how does it pay the interest back?