[USER]

I’ve been saving $ since I got a job and putting it into my brokerage account. I have $270k in investments, $140 in Roth/401k, and $15k in savings (emergency fund).

I can’t fathom taking $ out of investments because that’s for “later”…but also, I need a car. I do not have a car payment. Mine is old and having all sorts of problems and it’s just time.

I know I can take $8-10k out of savings and finance the rest. I’m also debating taking $20-25k out of investments to cover ~80% of the car and have a much lower monthly payment.

What have people taken $ out of investments for?

I’m going back and forth on if this is a good reason, or if I should not touch the investments and just manage the mo they payment.

I feel like I need to think about this more holistically.

Advice? Thanks friends!

[Eileen]

Maybe consider buying a cheaper car. You’re doing so good. I would hate to take money out of investments as well. I plan to buy used cars that I can pay for with cash and then keep them for as long as possible.

[Amy]

It helps to assign a purpose to every dollar you save or invest. For example, if the money in the brokerage account is for a house down payment, don’t spend it on a car. If the money in the sinking fund is for a new roof, don’t spend it on a vacation. This mental practice helps to get you in the habit of identifying and saving for future, predictable needs and also helps you avoid “robbing” from one goal to fund another.

You might consider saving aggressively toward a car and see how much you’re able to save before you can’t wait any longer, then decide how to fund the difference (loan, EF savings, brokerage).

[Charles]

Sounds like you may need to have additional discretionary/mandatory savings buckets (ie, for car/automotive services, housing costs/repairs/maintenances, etc.).

But because you’ve put all additional savings into the market (ie, treating an investment account as a savings account), then you’ll have to pull money out in order to fund any mandatory/discretionary spending that comes up.

Depending on how dire the need for the car, I would either startup the savings fund and add to it every paycheck, or sell equities to fund the purchase. Car loans are upwards of 7+% now so, it’d make sense to sell equities to payoff/fund the car purchase. Or if you’re secure at your employment, from your EF and replenish it shortly after.

Good luck. There’s always going to be future expenses, so perhaps look back at your past spending, and figure out what pools of money you’ll need in the future so you can save in advance and not be forced to sell in the future (as we know stocks can go down).

Selling equities now is currently better than having to sell them last year when everything was deeper in the red. Also, you can minimize your taxes by selling specific lots/tax loss harvesting.

[Author]

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