Where to Park Money for 1 Year

[scurry]

Hello Everyone,

I have about 500k that is currently just sitting in a checking account, earning no interest. Ultimately, this money will be used for a down payment on a home, which we anticipate buying within 1 year approximately. I would like to place this money in some account where I can at least earn a decent amount of interest/return, but also be able to access it at any time, if we find a home that we would like to purchase. Right now, the money is just sitting there, doing nothing for me.

Any suggestions on where to place this money?

Thanks in advance!

[Docbeans]

Ally savings is better than a checking account at 1% interest. Also a good place to park your emergency fund.

[VagabondMD]

Ally savings account 1.0%

[Noah]

Capital One 360 Money Market account also at 1%. Ally is also a great bank. Will be hard to do much better than 1% and there are several options for that.

[jfoxcpacfp]

In the short term (less than 5 years), liquidity and safety are a higher priority than earnings. Given that, you should find an account that will pay the highest rate of interest but guarantee you will have your money back when you need it. You have some excellent suggestions above. Bonds or T-bills purchased to mature at the date you need them are another option but they don't yield as much as online banks and are more appropriate for needs several years out.

[MichaelB]

jfoxcpacfp wrote:

In the short term (less than 5 years), liquidity and safety are a higher priority than earnings. Given that, you should find an account that will pay the highest rate of interest but guarantee you will have your money back when you need it. You have some excellent suggestions above. Bonds or T-bills purchased to mature at the date you need them are another option but they don’t yield as much as online banks and are more appropriate for needs several years out.

Click to expand...

Speaking of safety, do they need to separate this into 2 separate $250k accounts to get FDIC insurance?

[jfoxcpacfp]

MichaelB wrote:

Speaking of safety, do they need to separate this into 2 separate $250k accounts to get FDIC insurance?

Click to expand...

Good point. Yes, or one for each spouse.

[The White Coat Investor]

Two points:

# 1 You should probably break it up so no more than FDIC limits are at any given bank.

# 2 Where you should park it depends on the consequences of the money not being there in one year. If it isn't there in one year, is it a big deal? What if you had to wait 2 or 3 years, would that ruin your plans? If so, then minimizing fluctuations is key, and a savings account or CD is the right answer. If losing a bit of it isn't a big deal, you can put some or all of it into bond funds, balanced funds etc. A straight stock fund is probably too big of a gamble though, as they decrease in value in about 1 out of every 3 years, and sometimes lose 25-50% or more.

[Docbeans]

jfoxcpacfp wrote:

MichaelB wrote:

Speaking of safety, do they need to separate this into 2 separate $250k accounts to get FDIC insurance? 

Click to expand…

Good point. Yes, or one for each spouse.

Click to expand...

Johanna, so these account would not be joint accounts owned by both spouses but separate, individually owned?

[jfoxcpacfp]

Docbeans wrote:

jfoxcpacfp wrote:

MichaelB wrote:

Speaking of safety, do they need to separate this into 2 separate $250k accounts to get FDIC insurance?

Click to expand…

Good point. Yes, or one for each spouse.

Click to expand…

Johanna, so these account would not be joint accounts owned by both spouses but separate, individually owned?

Click to expand...

No, I'm sorry for the confusion. A joint account of $500k would be fine as long as the money is jointly owned. So, if scurry's money is his alone, (s)he would need to use 2 separate banks. If the $ belongs 50:50 to both spouses, a joint account will be fine. Of course, if the account is interest-bearing, it would go over by a bit (not considered material). Personally, I'd probably recommend a $400k joint account or 2 separate accounts at one bank and another bank for the remainder just not to bump up against the limits. FDIC has a good, simple chart here.

[scurry]

Great.  I opened 2 online savings accounts (1 for myself and 1 for my spouse). Thanks for all of your help.