Does it make sense to use my Roth IRA to earn gains on cash while saving for a car purchase?

External question — Personal Finance Stack Exchange Author: Luke Dunbar Original post: https://money.stackexchange.com/questions/167924 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. First ever posting here. Apologies in advance if this question is a bit convoluted. Trying to figure out the best way to go about buying a replacement car… I’m currently saving for a newer used car to replace my 2010 sedan that is starting to require repairs (i.e. shocks, minor body wear, brakes, etc.) that nearly exceed its current value of ~5k. I want to sell my current car (after repairing critical parts like brakes and tires) in the next ~6 months to maximize sale price. Ideally I would like to buy in December to take advantage of seasonal dealership offers. I’d prefer to buy the car cash, but may want to do a large down payment and take out a loan at my credit union to preserve some liquidity since if i bought in cash i would have limited liquid capital for a few months. My budget for this next car is 25-30k. At the moment I have 5k saved over the last two months and 6k in my emergency fund. Based on my monthly budgeting I can save 25k (including my emergency fund, a conservative value of what i can sell car for, and year end bonus) by early february. [Im fortunate to live in the same city as my parents and they are able to support me if an emergency occurred at some time in the next year. So im comfortable using my e-fund for this purchase. If i used my emergency funds for the car, I would be able to rebuild it, plus some, in 2-3 months] Right now I have the car savings in a HYSA earning 3.65% APY. In the interest of either, building up my savings quicker or having more liquidity after the car purchase, im wondering if it would be wise to make a short term investment in my Roth IRA to potentially earn more gains than my HYSA. I have not contributed to my roth this year since im saving for the car (i know this is not the smartest decision, but im contributing a ton to my 401k). My idea is to purchase $7000 of NVDA in my roth and put a stop loss at $5 under cost basis and let it ride until january. If it goes well, i could see 10% or more in gains based on the stocks trend over the last several months. If it goes poorly i lose out on a few hundred bucks. From what i have researched, i would want to do this in my roth since there only be a 10% penalty on gains for the short term sale compared to 22% CG tax in my brokerage. With this strategy i figure I can come out 7% or more ahead of just continuing to put my money into the HYSA until i have enough for a down payment or cash purchase. I’m not a market genius nor am i a seasoned trader, but to my knowledge the stop loss and relatively small amount im investing should reasonably mitigate risk. But please let me know if i am wrong or this is a stupid idea.

External answer — Personal Finance Stack Exchange Author: Hart CO Original post: https://money.stackexchange.com/a/167925 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. A stop loss doesn't guarantee you will only lose $5/share, shares sell at market price after it hits your stop loss price, so a large gap down could result in significantly more loss than expected. You can buy put options to have a fixed max loss, but the premium you pay for that protection effectively increases your cost basis for the shares. You would pay penalty and income tax on any gains you withdrew from the Roth IRA before retirement age, but the contribution you can withdraw without tax/penalty. Unless you are willing to delay vehicle purchase due to trade going against you, it's not generally advisable to invest short-term for a planned purchase.