Be safe, earn at same time

Short-term investment is good place to keep cash

Question: My wife and I recently sold our house but won’t need to use the proceeds to buy our next home for another six to 12 months. What’s the best place to keep the cash in the meantime?

Answer: Let’s assume your risk tolerance is zero for this money.

Until recently, you wouldn’t be able to expect much of a return from a risk-free investment. Thankfully, the improved economy and accompanying interest rate hikes have changed that a bit.

For example, six-month Treasury bills yielded 0.08% two years ago but now you can get a 1.97% annual rate of return. If we’re talking about $50,000, this translates to a return of $492.50 over a six-month period. It won’t make you rich, but it’s better than nothing.

If you don’t want to go through the trouble of buying Treasuries through an investment account, it’s possible to find similar returns with a savings account or CD, although you’ll probably have to look online. Most branch-based savings accounts still haven’t passed much of the Federal Reserve’s interest rate increases on to consumers.

Marcus by Goldman Sachs offers excellent rates on both as of this writing, with a 1.60% APY on their online savings account or a 2.20% APY on a 12-month CD, if you have that much time.

Shop around, as the best rates may be different when you read this, but the point is there’s no reason your money can’t be completely safe and earn you a decent return at the same time.