short-term investment recommendation

December 2, 2005 6:31 AM

I have a large sum of money (more than $200K) that was secured as part of a mortgage refinance for a house renovation. The renovation will not be undertaken until summer at the earliest. In the interim, where would you recommend I keep the money for a decent return in this short period? (e.g. Ing Direct savings account, a fund, or even a portion in the stock market?)
posted by terrier319 to Work & Money (11 answers total)

For absolute safety with no risk, break the money up and put it in CDs. You'll probably need to put it in three different accounts to have it be FDIC insured.
posted by ThePinkSuperhero at 6:34 AM on December 2, 2005 [1 favorite]

Sounds like you want basically zero risk with some return. Probably your best choice would be a short term CD.
posted by justkevin at 6:35 AM on December 2, 2005

Investing money in the stock market in the short term is not gemeraööu a good idea if you're not ready to lose it. And it sounds like you're not if you're planning to spend it in about 6 months. I would put it into whatever account pays the highest interest rate. So Ing Direct sounds like a good idea.
posted by keijo at 6:36 AM on December 2, 2005

Open a six month CD. ING Direct has six month CDs earning 4.1%. Off $200,000, you'll make $4,154. Do I see a gigantic television in your future?
posted by sdrawkcab at 6:37 AM on December 2, 2005

What you want is called a 6 month jumbo CD. You should be able to get 4.25-4.5%.
posted by I Love Tacos at 6:48 AM on December 2, 2005

Presumably, you are paying more for the mortgage than what you'll get on a CD. The difference is probably only around a percent, so having this money lying around for a while is going to cost you, net, around $1,000. Your mortgage-deduction tax benefit probably brings this back to around zero or better.

However, rather than just sticking it all into CDs, why not trying to get a pre-payment discount from your contractor or from the lumberyard. Assuming you trust and they are reputable, maybe they'll give you 5% off on prepaying 50% of the job, which means a 10% annualized rate at least on half of the money.
posted by beagle at 7:01 AM on December 2, 2005

We were in the same boat. 100K sitting for about a year while we finalized plans and got on the contractor's calendar. We did a CD, but I really like beagle's idea of pre-paying part of the bill. If it had occurred to me at the time I would have done that.
posted by fixedgear at 7:13 AM on December 2, 2005

Corus Bank has a 6 month CD with 4.40%. I just opened one last week. You've got a lot more do rei me to go into it than I, though.
posted by spicynuts at 7:38 AM on December 2, 2005

Some more good advice from MeFites
posted by SuperNova at 8:36 AM on December 2, 2005

Pay as much of the mortgage as you'll make back in salary before you need the $200K. It's several percentage points better than the best 6-month CD.
posted by rxrfrx at 9:01 AM on December 2, 2005

An alternative to a CD is a low-fee money market fund like those that Vanguard runs.
posted by Nelson at 11:33 AM on December 2, 2005