I'm looking to invest $25k in broad index funds, but I'm not sure whether a brokerage account or a Roth IRA would be a better choice for this money.
My main goal with this investment is to generate enough interest to be able to buy a gently-used car for "free" the next time I need one. (I would be withdrawing the principal for the purchase, not the interest, to avoid penalties. But the goal is that I would still have approximately $20k in the account from interest even after buying the car.) I buy Corollas that last a long time, so this money can be invested for well over 10 years before I would use it. (I realize that the 7% return I based my calculations on is not guaranteed and that all investing involves some degree of risk, and I do have an emergency fund and other savings in a HYSA.)
As I understand it, the Roth IRA has the advantage of tax-free distributions at retirement age, and withdrawing from the principal is allowed without penalty before retirement age. If that is correct, the Roth IRA seems like the obvious choice, but is there something I'm overlooking? Would there be any advantage to investing this money into a regular brokerage account instead?