alternative to CDs?

[moneybags]

I have some $$ in CDs and online savings accounts. The interest rates are pathetic. What are some other conservative options for the short term? I need to start using the money in 18 months for DD's college! The 1% rate is driving me nuts!

[Mr Nice Guy]

MMAs, or Money Market Accounts. Relatively liquid and you can earn some %. Not sure what rates are.

[thomsoad]

MMAs, or Money Market Accounts. Relatively liquid and you can earn some %. Not sure what rates are.

Rates arent much better. Unfortunately no risk and high returns just isnt a reality. You can either play it safe and get pathetic returns or take a shot at the s&p 500. I guess you could try a bond fund if you wanted the best of neither but is more of a middle ground in terms of risk/reward.

[bennkar]

You could invest in dividend bearing stocks. Utilities are farily safe. However given you are saying you want to use the money in 18 months... there is the risk of stock values going down over that time. No risk = no reward, so you need to see how much risk you want to take. Its unfortunate with the pathetic savings rates, but thats how it stands today. Personally I would put some into stocks, but thats just me.

[kork13]

You could invest in dividend bearing stocks. Utilities are farily safe. However given you are saying you want to use the money in 18 months... there is the risk of stock values going down over that time. No risk = no reward, so you need to see how muck risk you want to take. Its unfortunate with the pathetic savings rates, but thats how it stands today. Personally I would put some into stocks, but thats just me.

High dividend stocks were my first thought as well. Another option would be individual bonds, whether from companies or municipalities...though in that case, I'd also recommend that you plan to just hold them to maturity (bonds can potentially have lost value if/when you try to sell them early)

[disneysteve]

High dividend stocks were my first thought as well. Another option would be individual bonds, whether from companies or municipalities...though in that case, I'd also recommend that you plan to just hold them to maturity (bonds can potentially have lost value if/when you try to sell them early)

Yes, you might be able to find some bonds that mature around the time you need the money so that you could hold til maturity. Do a search at your broker's website and see what turns up.

[snafu]

It needn't be an 'all or nothing' scenario. I suggest splitting the sum in thirds, perhaps 1/3 Dividend MF, 1/3 Corporate Bonds, 1/3 MM or saving. Will the entire sum be needed in one, specific day?

[Joan.of.the.Arch]

A $20,000 checking account at my credit union currently would earn $502 in a year. That's still pathetic compared to a few years ago, but it would be a safe place put money you'll need shortly. No minimum balance required either. So don't forget to check credit unions.

A local small bank is offering the same terms on checking accounts.

[DanielB]

Ally has a no-penalty early-withdrawal CD currently paying around 2%. Not great, but better than 1%.