Use a Roth IRA for your rainy day fund

Umbrella over stacks of coins

Most experts recommend putting three to four months' worth of income in a savings account or money market fund to see you through a layoff or serious illness.

But a Roth IRA is an intriguing alternative for emergency savings.

Unlike most types of IRAs, contributions to Roth accounts aren't tax-deductible. As a result, that money can be withdrawn, penalty-free, anytime you need it. (Other IRAs charge a 10% penalty on withdrawals before turning 59 1/2.)

The only catch is that you've got to repay your account within 60 days or the withdrawal is considered permanent. Any deposits you make after that will be considered a new contribution and count against the maximum annual contribution -- $5,000 if you're under 50 and $6,000 if you're over 50.

If your IRA is invested in mutual funds, it should earn more than a savings or money market account, and there's a big tax advantage, too. You'll never pay taxes on the IRA's dividends or capital gains as long as those earnings aren't withdrawn until you're 59 1/2. The interest from a savings account or MMA is added to your income and taxed each year.

Putting $1,000 a year in a Roth IRA that earns an 8% annual return for 20 years will result in a $50,000 nest egg. That would be $30,000 in earnings for retirement that you might not have had, and $20,000 in contributions for an emergency -- or retirement if life treats you right.

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