Juanita is saving up to buy a truck. She wants to put $4000 down and borrow the rest. That down payment will lower the monthly payment so she can easily afford a new truck. She has been saving for 18 months and has half the money. It will take her about the same amount of time to save up the other half. What should she do with the $2000 in the meantime?

Question

Responses

purchase a government bond and postpone the purchase

keep it in her checking account with the money she spends regularly

change her strategy and borrow all of the money to get the truck sooner

invest in a treasury bill so that she can access the money when she needs it

Answer 1

Given Juanita's situation, the best option for her $2000 in the meantime would be to:

Invest in a treasury bill so that she can access the money when she needs it.

This option allows her to earn some interest on her savings while still keeping the funds relatively liquid, meaning she can access the money when she’s ready to make her down payment. Treasury bills are short-term government securities that are considered very safe and can provide a return on her savings without tying up her money for too long.