steering wheel

What’s the best place to keep my car down payment?


Q. I have been saving money on the side to buy a new car. And of course now that I have the money, car prices are so high and supply so low, I’m waiting as long as I can – at least as long as my old car will let me. But getting like nothing from my savings account is painful. Is there something else I should do with the money?
— Driver-to-be

A. Congratulations for accumulating the money you need for your new wheels.

We know the low interest rates are painful.

But while savings accounts and Certificates of Deposit (CDs) interest rates are frustrating, these are still the most appropriate place for you to stash the dollars you have accumulated, said Claudia Mott, a certified financial planner with Epona Financial Solutions in Basking Ridge.

“When it comes to saving for short-term goals, like the purchase of your car, the money should be kept in an account that has little to no risk and a high-yield online savings account is probably your best bet,” she said.

Certificates of deposit have different maturities and there are penalties when money is taken out prematurely, she said. Given that it’s hard to know when the car you would like to purchase may become available, choosing the maturity of a CD might be a challenge, so you may want to avoid 2- or 3-year terms, she said.

“Using a mutual fund or other investment is appropriate for long-term goals such as retirement savings when the time horizon can handle the ups and downs that are inherent in the capital markets,” Mott said.

You may want to try searching online to find a liquid account that will pay at least a little more than what you’re currently getting.

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This story was originally published on Dec. 16, 2021. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.