I think you miss the point that the Roth can be the EF, if there is no excess to go into a taxable EF.I'm with the others who say to max your Roth each year if you can.
If the contributions to the Roth make your cash emergency fund too low for comfort, you can put a relatively small portion of your Roth in money market fund until you can build up your cash reserves. Otherwise, I your investments in stock index funds are spot on.
There is ZERO reason to save in taxable if you cannot max your Roth.
Invest the Roth funds in a money market or T-bills (something safe for your EF). Once you have enough EF, then invest in stocks. If you ever need to pull the EF from the Roth, then it's still better than if you had saved in a HYSA because you would not have paid taxes on the earnings as you would have in a taxable account.
Once you can save more than the Roth limit each year, then you can start investing in a taxable account. Even then, I think it's better to have the liquid part in Roth and invest in equities in taxable (due to the difference in taxation, capital gains vs interest). To get emergency cash, sell equities in taxable and buy them in the Roth. No risk of having to sell equities low.
Statistics: Posted by RyeBourbon — Wed Jul 24, 2024 1:40 pm — Replies 23 — Views 1858