Short term investing advice please..

[DM1979]

I have a small trust fund in the form of some rental property. Because of this I must pay some pretty hefty estimated Taxes quarterly. Typically I take my rent payment and stick half in my personal checking account for paying bills (I still have some CC debt, but that is fading fast - I'm working some insane OT at work and I should be debt free in a few months), and the other half into a separate savings account (that is, separate from my personal savings account).

example:
$1200 deposit 1/15
$1200 deposit 2/15
$1200 deposit 3/15
$3600 payment to IRS before 4/15.

I'm thinking there has to be some better place to put this money than a savings account that is only paying chicken scratch for interest. I need a no risk solution (I need this money to pay the IRS, absolutely not willing to risk not having it) that will not penalize me for withdrawing the funds on a schedule similar to the above example.

Thanks!

[jpg7n16]

I'm thinking there has to be some better place to put this money than a savings account that is only paying chicken scratch for interest. I need a no risk solution (I need this money to pay the IRS, absolutely not willing to risk not having it) that will not penalize me for withdrawing the funds on a schedule similar to the above example.

Thanks!

Risk and return go hand in hand.

No risk = no return.

The only thing you can do is shop rates on cash. You MUST keep in cash based on the highlighted piece in blue. There are links in the Investing & Banking threads about current bank rates.

[bjl584]

I have a small trust fund in the form of some rental property. Because of this I must pay some pretty hefty estimated Taxes quarterly. Typically I take my rent payment and stick half in my personal checking account for paying bills (I still have some CC debt, but that is fading fast - I'm working some insane OT at work and I should be debt free in a few months), and the other half into a separate savings account (that is, separate from my personal savings account).

example:
$1200 deposit 1/15
$1200 deposit 2/15
$1200 deposit 3/15
$3600 payment to IRS before 4/15.

I'm thinking there has to be some better place to put this money than a savings account that is only paying chicken scratch for interest. I need a no risk solution (I need this money to pay the IRS, absolutely not willing to risk not having it) that will not penalize me for withdrawing the funds on a schedule similar to the above example.

Thanks!

You don't have many options right now. Interest rates are non existant. About the only option may be to put your money into 3 month CD's, but it probably isn't worth the hassle. An online bank might give you .25% which may be better than you get now, but it would only be an extra dollar or two in interest. Probably not worth the trouble.

[phantom]

I think your savings account is an ideal vehicle for holding money for such a short period of time. If you're earning closer to .1% on it rather than 1%, you should probably look online for a better savings account. But, you're really not going to do much better than 1% guaranteed safe money right now.

My husband and I are in a similar situation because we choose to pay our property taxes ourselves rather than using escrow. We have a separate savings account that we transfer money into every month. Then, when our taxes are due to the county or to the municipality, we pull money out to pay them. Sure, we only earn a couple of dollars a month on our money, but we find this preferable to using an escrow and not earning anything at all.

I figure anytime you can make even a little money while just holding money for someone else, you come out ahead.

[Petunia 100]

TIAA Direct Bank is paying 1.25% on savings accounts right now.

Short term = cash, so savings accounts, CDs, or high yield checking accounts are your options.

[scubatim84]

Everyone has pretty much already said it, but I want to make a plug for Capital One Bank savings accounts. They're offering somewhere in the neighborhood of 1.10% right now. I totally don't blame you for wanting a no-risk solution, which is smart given what the money is used for. When I was a sole proprietorship before I incorporated, I did the same thing by keeping estimated tax payments in a savings account with a credit union that gave around 1%...beyond that, there's not a lot of options. I like the idea of a 3-month CD, but sadly, that will probably yield the same interest rate anyway and will have less liquidity. You could look at a money market fund with a reputable company like Vanguard, but even low-risk investments like that probably aren't worth it in your situation...especially given the fact that the interest rate will still be a pittance.

[jasminelane]

Savings account – Investing in savings account is the safest option as it is less risky and has high liquidity too. The minimum amount required for this investment differs from one bank to another.