Buying expensive things like cars?

[fenders53]

(03-20-2022, 11:12 AM)ken-do-nim Wrote: Hi all,

I will probably need a car in about 3 years.  I see the prices for cars have gone way, way up since I last bought one.  If I want to go new, I'm probably looking at $35k or so.  I see a few options for budgeting for something like this:

1. Start building up a cash position now and don't invest in the market again until I have set aside the amount needed.
2. Build up reliable funds like VOO or SCHD and cash them out when the time comes.
3. When the time comes, cash out stocks/etfs that have made large gains, since presumably they are reading for trimming anyway.
4. When the time comes, get rid of underperformers.

How do you do it?



Edit: can a mod move this to "other topics"?

I'm sure you know the textbook answer is any cash requirements for the next 3-5 years should not be in equities.  I think you would figure it out if things don't go perfectly.   Something like VOO/SCHD isn't completely crazy. Maybe split it up and buy whatever looks like the better value each month.  If things go well and you are way up I would pull some out about a year before you need it.  

If the market gets hit much harder, I am considering hiding a bit of my cash I intend to withdraw and spend in a few years into SCHD.  I'll figure it out if it doesn't go perfectly.  Maybe in a year we can get a reasonable yield for cash with lower inflation?