Struggling here with implementing sinking funds into the household budget. We do fairly well in all other budgeting aspects, but this is an area that evades us. Since we’re fully maxed out on our IRA’s and HSA for the year, would it be a terrible idea to start a taxable brokerage account for sinking funds in order to grow money for larger expenses? Or should sinking funds simply be put into a regular bank account?
Generally, I’d probably keep them in a regular ol’ savings account. Any money you plan to spend within a year or two won’t have much time to grow but will be exposed to a lot of volatility by investing. Take a look at this article for the rationale why: