Roth IRA isn’t for frequent early raids

Q: If I want to invest, ideally in a Roth IRA, and also be able to withdraw the money whenever I need to without paying a penalty, what should I do? — M.C., Saratoga, New York

A: Any money you think you might want to withdraw within five years (or, to be more conservative, 10 years) shouldn’t be in stocks, as the stock market can swoon at any time and take years to recover. Short-term money should be parked in investments such as CDs or money-market accounts.

Roth IRAs are great longterm savings accounts, designed to let us withdraw money in retirement tax-free. They have rules, though. You’re expected to leave your money in them for at least five years and not withdraw your earnings until at least age 59 . Otherwise, a 10 percent early-withdrawal penalty can apply. Learn more at rothira.com and fool.com/retirement/ ira/compare.aspx.

To invest in stocks and be able to withdraw funds whenever you want — although it can be good to not sell after a market drop — you can open a regular brokerage account that’s not tax-advantaged (that is, you’ll face taxes on capital gains). Don’t dismiss the Roth too quickly, though; its tax benefit can be powerful, especially if your investments grow in it for many years.

Fool’s School:

The worst odds

Every now and then we read of someone winning hundreds of millions of dollars in a lottery, and it can have us thinking about buying some tickets. Lottery tickets may offer a little hope for a little while, but they’re close to worthless. They can even hurt you financially, if you buy too many.

Americans spent more than $80 billion on lottery tickets in 2016, which is more than they spent on books, movie tickets, music, video games and sports tickets — combined. Worse still, studies have found that those in low-income brackets tend to spend as much as 5 percent of their income on lottery tickets.

The odds of winning the Powerball or Mega Millions grand prize are, respectively, 1 in 292,201,338 and 1 in 302,575,350. There are about 327 million people in America, so it’s almost like randomly picking one resident as the winner. Your odds of being killed by a tornado (1 in 5.7 million) or being struck by part of an airplane falling from the sky (1 in 10 million) are far better.

Even winning a big payout isn’t likely to save you, financially: About 70 percent of big lottery winners or recipients of large windfalls end up bankrupt within a few years, according to the National Endowment for Financial Education.

About one-fifth of Americans see the lottery as their only route to saving a significant sum, while 15 percent of millennials see lottery tickets as their retirement plan. Don’t be like these folks; know that you can accumulate meaningful sums by socking away money regularly and investing effectively over many years.

Name that company

I trace my roots to 1969, when nine small food distribution companies across the country joined forces as the Systems and Services Company. I kept growing through many acquisitions, and today, based in Houston, I’m the world’s top seller and distributor of food products, with a market value recently near $32 billion, more than $55 billion in annual sales and more than 65,000 employees (including more than 8,000 drivers). I deliver to more than 500,000 customer locations, including restaurants, health care and educational facilities and lodging establishments. I have increased my dividend 49 times since 1970. Who am I?

Last week’s answer

I trace my roots to 1923, when the Hassenfeld brothers founded me in Providence, Rhode Island. I started selling textiles and then added school supplies. My first toys were doctor and nurse kits. I launched Mr. Potato Head in 1952 and GI Joe in 1964. Today, my brands include Nerf, My Little Pony, Transformers, Play-Doh, Monopoly and Magic: The Gathering. Who am I? (Answer: Hasbro)