3. Car payments
If you’re that savvy person who saved enough to purchase a car with cash, then congratulations! You’re awesome. If you have excellent credit, you may be able to finance a car purchase at the current low rates (between 3.99 and 4.99 percent for buyers with good credit). For instance, if you were intending to spend $20,000 on a car, you might instead put down 20% and invest the remaining $16,000. You will pay interest on your decreasing balance, but you can benefit from compounding gains on your growing investment balance.
4. Your house
Similar to the purchase of a car, most people don’t have the necessary amount of money to pay cash. And even if you reached the goal and saved a lot for it, this might not be a good idea. Why? When you pay cash for a home, you lose the opportunity to benefit from a tax advantage that is specific to mortgages, and that sizeable sum of money would be better spent on investments. Instead of paying cash, you might think about financing it if you are eligible for a suitable home loan.
