I’m putting away $300 a month, my question is where to put it. savings account has basically 0 interest, there are HYSA (high yield savings account) that would give me 3-5% apy, or I already have some money in stocks that have grown consistently 25% over the last year (index funds only)
what would you guys recommend? I’m looking to buy it probably 3 years from now. that way either I’ve got a fat down payment or I can just buy it cash
thanks
Money market or high yield savings. They may not return much but will keep you at or above inflation. 3 years is too short for stock. Maybe it would work, but maybe it won’t and you can’t recover that quickly.
In general I think ten years where stock is an unbeatable investment where you’ll almost always come out ahead.
Money market like vmfxx, tax exempt bond like vteb, Treasury money market like vusxx, tbills which are tax exempt from the state.
These are all generally pretty safe and low risk. With tbills you have a little more flexibility to stagger or create a ladder.
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High yield savings account or the short term Treasury bonds, and good luck with this, I hope at the end you have enough for a car AND no need for a car so you just have money.
I want a car though, I’m a car guy
unless I buy a motorcycle
I have a car and love it (Accord Sport 6 speed manual) but use the electric bike to commute, and let the kids take the car since they have a longer drive. I want to keep it when they move out though, it’s just such a great car and harder to find stick shift now.
But if it didn’t rain so much here, I do think I’d sell it to the kids (cheap since it’s paid off)
Motorcycle insurance here is like $100 a year but car insurance about $300 a MONTH, so make sure you budget for all those extra costs, fuel, insurance, maintenance.
3 year horizon: Not stock market. Unless you are okay with delaying the purchase for as long as it takes for the market to recover.
High interest rate account is what I’d look for.
There are some personal finance communities on Lemmy that would likely be eager to answer this one for you. Seems like communities you might be interested in if these kinds of questions are important to you.
do you know which ones are active?
The most active is the Canadian one. But there’s a lot of crossover there. Most suggestions you get, especially for something like this, are going to be relevant in any major western country. The UK one is the second most popular.
If you want to save less than 5 years, banks with CDs or high yield accounts are your best bet. The stock market is far to volatile for short term saving, you really need need 5-7 years of investing to make growth likely.
With cars specifically, an option is to use existing car + bank account to buy a better car for cash on a 6 month to 1 year timeline. This works because at the low end cars don’t really deprecate until they break. This stops working well in the 10-15k range.
In short, since this is somewhat near term, you probably want as little risk as possible, so stocks are not recommended.
Said longer, a high interest savings account or bond fund at 2-3% is probably your safest bet, but you also need to consider the opportunity cost— tariffs WILL increase the price of a new vehicle this time next year, so are you planning to buy new? Does it make any sense to buy now and refinance later? Tariffs could be as high as 25%, depending on which way the wind blows (country of origin, assuming new, etc).
Opportunity cost aside, what’s your spending target, how much do you have saved already, and how much does optimizing on interest rate actually help?
From $0, saving $300/mo for 3 years at 0% interest is $10,800.
At 3% interest, the same total after 3 years is $11,127, which nets you $327. That’s not nothing, but even an insanely optimistic 10% is ~$1100, but you would be just as likely to lose money.
Your needs and risk profile are yours alone, we’d need a lot more information to say more than “low risk and buy used”.
100% used, I’m looking at the 10-15k price range
You Wouldn’t Download A Car! 🏴☠️
