I like to begin with the end in mind. So generally, I save and invest for retirement. I do have a regular brokerage account but that is savings for my kinds, our savings is in IRAs and 401(k)s. Not to say that having a regular brokerage account is a bad idea. You can always buy stocks to hold for a long time, it’s up to you.
But, What If I Want To Buy A House?
You could actually use up to $10,000 of an IRA to fund a down payment if you haven’t owned a home in the past two years. (Zachs) That is the rule as I understand it, but you may want to check on this for yourself.
If you are planning to buy a home soon, like in the next couple of years, you probably want your down payment saved in a bank savings account. This is the safest place to keep cash. And you won’t have to wrangle your investments into paying on your time table.
What If I Want To Fund A College Education?
If you are saving for your child or children to go to college in like 15 years, investing for this might be a good idea. If you are within 5 years, I would shift to a bank savings account.
One thing you may want to consider if it makes sense for you to flat out pay for a college education. There are options like grants and loans. My personal opinion is that you want your child to have skin in the game, so have them take out a stafford loan first before you contribute.
There might also be a non-college career that your child wants to pursue so you could be saving for 15 years, then the money is never used for its intended purpose.
Why Save And Invest For Retirement?
You save and invest for retirement because it is your biggest expenses and it is usually the final thing you save for. I could be wrong about that… But you definitely want to make sure you’re ready for retirement when it’s ready for you. Remember medical bills, by the way, because they are often a big money hog as you get older. It would probably be nice to have double what you think you’ll need.
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