New Visitors Privacy Policy Sponsorship Contact Us Media
Baby Boomers Family Green Home and Auto In Critical Condition Just Starting Out Lifestyle Money
- advertisement -
Bankrate.com
News & Advice Compare Rates Calculators
Rate Alerts  |  Glossary  |  Help
Mortgage Home
Equity
Auto CDs &
Investments
Retirement Checking &
Savings
Credit
Cards
Debt
Management
College
Finance
Taxes Personal
Finance

Ask Dr. Don
Bankrate.com

Short-term investing

Dear Dr. Don,
We sold some land, and need your advice on where to put this money. We will build a new home next year, and will need the money at that time. We want to put the money into something that will have a high interest rate, but yet will be able to get it out next March. Please help us. Also, what is the difference in money market investments and CDs?
Janie Jargon

Dear Janie,
When you're investing for a short-term financial goal, you don't want to take on much risk in your investments. The more conservative your investments, the lower the expected return. Taken together, that means that safety of principal is more important to you than the investment's expected interest rate.

- advertisement -
When I wrote this reply you could invest in a one-year certificate of deposit and earn 3.25 percent by using Bankrate's Best Rates feature to find a high-yielding CD. You can use the same feature to find the best rates in your market.

A money market investment is a short-term debt investment that matures in less than 13 months. CDs can be considered money market investments if the term of the CD is less than 13 months.

Money market mutual funds are mutual funds that invest in short-term debt securities. Even though they can invest in longer-term money market debt, a money market mutual fund will have weighted average maturity of 90 days or less.

A money market account can be FDIC insured while money market mutual funds are not FDIC insured, but money market accounts are limited in the number of financial transactions that can take place in the account each month. Money market mutual funds may charge transaction fees, but since you don't expect to generate a lot of transactions in the account, that shouldn't be a concern.

-- Posted: Feb. 21, 2002

top of page
See Also
Best and safest fixed income investments
A look at no-risk investments
More Dr. Don stories

Print   E-mail

30 yr fixed mtg 4.25%
48 month new car loan 3.18%
1 yr CD 0.65%
Alerts


Mortgage calculator
See your FICO Score Range -- Free
How much money can you save in your 401(k) plan?
Which is better -- a rebate or special dealer financing?
VIEW MORE CALCULATORS

BASICS SERIES
Begin with personal finance fundamentals:
Auto Loans
Checking
Credit Cards
Debt Consolidation
Insurance
Investing
Home Equity
Mortgages
Student Loans
Taxes
Retirement

MORE ON BANKRATE
Ask the experts  
Frugal $ense contest  
Quizzes  
Form Letters


- advertisement -
 
- advertisement -

About Bankrate | Privacy Policy/Your California Privacy Rights | Online Media Kit | Partnerships | Investor Relations | Press Room | Contact Us | Sitemap
NYSE: RATE | RSS Feeds |

* Mortgage rate may include points. See rate tables for details. Click here.
* To see the definition of overnight averages click here.

Bankrate.com ®, Copyright © 2014 Bankrate, Inc., All Rights Reserved, Terms of Use.