Q: I’m a 35-year-old married sales rep with a 7-year-old. My ultimate goal is to buy a house or condo. I have a substantial amount invested in my 401(k) from a previous employer, and I have saved about $10,000. I want to put aside even more. What’s the best way?
— T. Versailles, New York
Ã…: While you have saved $10,000 toward your goal, it may take more than a year to save up an adequate down payment. You should consider reducing your 401(k) contributions at your
current job and instead channel as much after-tax income as you can into a high-yield savings account. Interest rates on savings accounts from Internet banks have increased recently, so you may be able to get a good rate.In January, ING offered 3.8% interest on its Orange savings account (www.ingdirect.com
), HSBC offered 4.25% for its online savings account (www.us.hsbc.com/1/2/3/personal/ savings) and Capital One’s high-yield savings account (www.capitalone.com) offered 4% interest. All of these options can be linked to your current checking account to make automatic deposits. These accounts have no fees and low minimum balance requirements.If your time horizon is a bit longer, you could purchase two-year treasury bonds for $1,000 each at TreasuryDirect (www.treasurydirect.gov). In January, the two-year U.S. Treasury bond delivered a 4.37% interest rate.