Why not use my savings account, money market, mutual funds, IRA or other retirement account for banking purposes?
Banking can be done with any of the financial vehicles above. After all, were simply borrowing from ourselves and paying ourselves back. In this case you have to look through the shell to get the nut, we have analyzed each financial vehicle and weighed the pros and cons of each. Deposit accounts like savings and money market accounts are tax nightmares. You deposit post-tax dollars and the growth within your account gets taxed every year. Rates of return are historically some of the lowest offered so its very hard for your money to go to work for you. Your money is safe and liquid but does not grow tax-deferred like a whole-life insurance policy and cannot come out tax-free like a whole life insurance policy. In addition, you do not get the income tax-free life insurance that will protect your family and heirs upon your death. Mutual funds can get a nice external rate of return but all growth is subject to capital gains tax. This means that your effective rate of return is much lower.
