How to invest $30k for 3 months?

November 4, 2009 7:09 AM

What are some good low risk ways to invest $30k for about a 3 month period?

So, our house is under contract, but, so far we've been unable to find a house that's meeting our requirements. At this point I feel that we aren't going to see anything good until after the holidays. So, we're probably going to switch over to looking for a rental. Rather than just sticking the money in the savings account, I'm open to taking some of it and seeing if we can get some kind of return, but, I don't know anything about investing. So, what are some ways I can invest around $30k for around a 3 month time frame that will see some kind of return. Obviously I can't get too crazy with this money and I understand that 3 months is a pretty short timeframe. Would there be any tax implications in doing this? Thanks in advance.

posted by trbrts to Work & Money (8 answers total)

CD?
posted by stormpooper at 7:17 AM on November 4, 2009

The only thing you want to do with this money is put it in a 3-month CD. Anything else will be too long-term or too high-risk (and, frankly, if you want to buy a house with it, any risk at all is too much.) The only tax implications are that, well, you'll make money; you'll owe X percent on that interest, just like any other income.
posted by Tomorrowful at 7:23 AM on November 4, 2009

Be sure to check the rates for both CDs and savings accounts, since you may be able to do a bit better with a savings account while also having penalty-free access to your money should you just happen to find the perfect house before January.

Either way, the tax implications are the same: you'll pay tax on the interest the money earns.
posted by DrGail at 7:23 AM on November 4, 2009

For a timeframe like that I'd personally just go with the highest interest savings account you can find. It's completely safe, flexible, and actually sometimes has better rates than a CD with restrictions. Rates are extremely low right now for high interest savings accounts but ING Direct has a 1.55 APY which is very likely better than your current bank. This page from Get Rich Slowly says it was updated in Oct 09 and collects rates from some well known ones.
posted by haveanicesummer at 7:25 AM on November 4, 2009

One option is Ally Bank, which has a 1.5% no penalty CD. It has the advantage over a general savings account in that if everyone else drops their rates, it will stay fixed. And the rate is better than a 3-month CD.

But practically, it doesn't even matter that much over this short time period, and with such low rates now. At a 2% return, you will earn $150 in interest, and at 1%, $75.
posted by smackfu at 7:41 AM on November 4, 2009

Lots of banks will do 3 month specials on money markets accounts, which are just jazzed up savings accounts and FDIC ensured. In my area, at least, if you can qualify for a "select" acount, the MM rates are higher than CD rates right now.

The get the special rates, a bank may require you to open a checking account too, or keep the account open for certain period of time. You might have to keep a small-ish amount in the money market account to avoid a small early closure fee.
posted by spaltavian at 7:51 AM on November 4, 2009

Actually, on further reflection, your best bet is to find a local reward checking account, which are offering significantly higher rates (~4-5%) in exchange for extra requirements like a certain number of debit card transactions. Sometimes that can be a burden, but for 3 months those extra requirements should be simple and the 3% additional interest would be a few hundred dollars.
posted by smackfu at 7:58 AM on November 4, 2009

Just put the money in a GIC at ING. I think you can get 3 month ones. Otherwise just leave it in a savings account. Honestly though, anything safe isn't going to net you that much in 3 months.
posted by chunking express at 9:01 AM on November 4, 2009 [1 favorite]