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I'm in my 20's. I'm a big saver and I think I've covered the basics, including:

  • Paying off all high interest (>3%) debt.
  • Getting the full company match out of my 401k.
  • Maxing out my Roth IRA for the year.

I still have a decent amount of cash flow, so my savings account is starting to grow rather large and earning a meager 0.5% interest. Since I need this money for a vehicle purchase in 5 years, I think (?) it would be unwise to put this extra cash into a Traditional IRA or 401k.

Is there a tax-advantaged way for me to invest this extra cash or have I expended all available options?

EDIT: After living life for 7 years and working in the financial sector, I've gained some additional knowledge that I've summarized in my answer here: Best way to start investing, for a young person just starting their career?

Chris W. Rea
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James Jones
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1 Answers1

5

Options:

  • Buy Vanguard Bond Funds that are tax free for wherever you live.
  • Put the money into the highest yield savings account you can find (for amounts over 5k this is probably going to be 1.25%)
  • Put the money into the highest yield CD you can find.

(personally I did the first and it is working well).

Michael Pryor
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