Received a great question last night from the website form, worthy of a quick post.
Question: Would a mutual fund give access to cash and what would the penalties be to pull money out?
Answer: First of all, thanks for sending this question our way. Let’s breakdown this question. Mutual funds are a type of investment. Mutual funds are an option of where you can put your cash. Similar to a bank account, individual stock, exchange traded fund (ETF), index fund, and so on. Where the mutual funds are held determine a penalty when withdrawing money in the event you need cash.
You have two options; you can open a non-qualified investment account or a qualified investment account. The difference being a qualified account is a retirement account. If you pull money out of a retirement account, without a qualifying event, you will receive a penalty tax. Therefore, if you are looking for an account to invest in mutual funds (or stocks, ETF’s, index funds, etc.) and want to have access to the money without penalty taxes, you can find these advantages in a non-qualified investment account. Accounts you withdraw money without penalty tax are referred to as “liquid” accounts. We find these accounts to be beneficial to our clients who are looking for additional growth of their money (compared to a savings or checking account) and also have the quick access to cash if needed.
Click here if you would like to learn more about your options and if we can assist you with your investment planning.
This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.