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I see people saying that they keep a portion of their Roth funds in "cash." When they say that, do they mean that the money is sitting in a Money Market type of fund? I'm been re-thinking my EF strategy. I have 2 months of basic expenses in an easy to access Ally Account but want another 4 months buffer and I'm comfortable using my Roth as that space temporarily. I have almost 7k in my Roth so I'd like to park about 3k in "cash" so would I want to choose a fund from Vanguard such as VMMXX (Prime Money Market) fund? Thanks!
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Exactly.
We had some cash in Vanguard and Fidelity money market funds (our ROTHs, respectively) for a time. Was just when I would have been uncomfortable moving that money over to retirement otherwise, but did, so that we could max out ROTH for one or two years. Was able to keep the security of an "emergency fund" in case of a true emergency.
That is certainly the simplest way to hold cash in a retirement account. Particularly if it's a fairly short term cash holding that will be invested eventually. -
Prime Money Market would work, though the yield is almost nonexistent. Online banks such as Ally and Capital One 360 offer IRA accounts, so are another place to keep cash inside an IRA.Comment
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Thanks MM and Petunia. I can now breathe a little easier knowing I have a fairly well funded EF that I can continue to add too! I'm not worrying about the yield. I just don't want to lose the Roth space available to me this year just to fund my EF in my Ally account. I can always move that money back into other funds when my Ally account has more money.Comment
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