Where to put a car fund?

[StepRightUp]

Hey guys,

Sorry if this is a topic you've seen before. If so, please refer me to older posts.

After saving 18% of my gross for retirement, I'm left with the ability to put $100 a month somewhere. So I was thinking a car fund. My goal would be to pay in cash for all repairs and ultimately my next used car in about 8 years or so. That's about $10,000 in savings at $100 a month.

At the moment, I have a about $1,200 in a TROWE Spectrum Income bond fund.

What do you think is the ideal vehicle (pun sort of intended) for such a fund?

TROWE bond fund, savings account, I bonds, CDs, mattress, other?

Thanks

[maat55]

I earn 4.10% on a checking account I treat as a savings account. I combine it with my EF.

[GREENBACK]

I earn 4.10% on a checking account I treat as a savings account. I combine it with my EF.

Where is this at?

[momofla]

I would love to know where that account is as well.

[bjl584]

With an 8 year time line you can afford to have your money tied up in CD or in a low risk fund.

And, i too would love to know how Matt is getting 4.10% in a checking account. Sign me up for that one today!

[StepRightUp]

Yes, I'm leaning toward keeping a portion of it in a low-risk fund, and the other portion, from which I can pull for repairs, in a savings account.

I've seen 4% checking accounts. My roommate has one at Cambridge Savings Bank here in MA. But it's prorated on a balance of $10K-$25K and requires direct deposit and x number of debit card purchases per month.

[littleroc02us]

Yes, please sign me up today for the 4%. Not likely.

[mommyof4]

I earn 4.10% on a checking account I treat as a savings account. I combine it with my EF.

4.10%???!!! Where? How? For goodness sakes man, tell me!!!

[Robert742]

4.10%???!!! Where? How? For goodness sakes man, tell me!!!

High Yield Reward Checking Accounts - BestCashCow

There are some hoops through which you must jump (online banking and statements, 10-12 debit card payments, etc.), but you can get more than 4% on Rewards checking. I'm with Evantage Bank, and I get 3.75%, but it was 4% until 2 months ago. One caveat: rates can be lowered each month, and usually the bank with the highest interest rate is the soonest to drop its rate.

To the op, I would use your car savings as part of an emergency fund, which you want access to without risk of principal. I would go with any savings vehicle with safety of principal that gives you the highest after-tax return.

I imagine a Rewards checking account might be a good option for you if you are okay with online banking and the requirements to get the interest rate.

[MrPolarZero]

I think CD's would the right one for that purpose. Their maturation period can be set to a particular time, by which you can make the most out of the fund.

[snafu]

A low cost Index fund that would allow $100. DCA ea. month for at least the next 3 yrs seems a prudent way to begin funding a vehicle 8 yrs. future. There will be ups and downs and you can evaluate both your circumstances and the economy each year switching to CD if it seems prudent. Unless there is another 2008 style meltdown, I'd switch to a CD one year before anticipated purchase.

[maat55]

Where is this at?

https://www.rcbbank.com/pages/go_green_rewards_checking

[GREENBACK]

https://www.rcbbank.com/pages/go_green_rewards_checking

Not bad, thanks.