Where to park down pymt?

Stick to simple cds. You don't want risk to your pricipal.
And don't worry about early withdrawal if you have to, what are going to lose? A portion of the putrid interest? Big deal.
You can also spread it to hedge your bets on early withdrawal, 1/3 in revolving 3 month cds, 1/3 in 6 month, 1/3rd in one year, depending on the spreads and if its even worthwhile.

Thanks, Truthskr.
I was thinking CDs, but then I saw how puny the interest rates are.
Thanks for the tip too abt dividing it in thirds.

Park it in my Ponzi Scheme.

Also keep an eye on ads, some banks may offer a nice rate if you open a checking account or whatever.
Just stay on top of it and when they come back down to the dumps, be quick with opening an account somewhere else that's looking for biz.
You'll sometimes find some local banks hungry for depositors, and the plus side on that is if and when you find something, they may be aggrsive in getting your mortgage biz on your purchase.

Short-term National Muni Bond Fund - average yield 1.5%, federal tax free, daily liquidity

Where do local banks advertise? Or can you name a handful in Manhattan and I'll look them up? I feel like all I ever see are Chase, Citi, TD, HSBC. Discover Bank has the best rates, but I'd so much rather do this in person than over Internet.

go to bankrate.com, it gives you the highest rates available nationwide. sometimes the banks are really small (eg omaha village bank) so you have to check FDIC, but its a great website

Apt Boy, is that a general category of bond funds or is National the company's name?

I've been in this boat for three years now.

A few of my favorite products:
1) For awhile, Ally Bank (http://www.ally.com) had "No Penalty" CDs with decent interest rates. I just looked, and the interest rate is now awful, but you may want to keep an eye on it. Ally also has lower penalties on most CDs than most banks. (I think two months v. up to six months, but not entirey sure on that.)

2) Ally as well as Discover Bank (http://www.discoverbank.com) tend to consistently have some of the highest yields on savings/money market (FDIC guaranteed) accounts. Others come and go, but these two have always been near the top for the past few years.

3) If you are willing to take on a little risk for about half a basis point, the GE Interest Plus (http://www.geinterestplus.com) has a non-FDIC-insured (but stable value) short-term corporate bond fund. Ford also has one, but the ratings are much lower, so I stay away from that.

4) For awhile, there were crazy "rewards" checking account that were paying 4-6% interest on up to $25,000 if you made 13 debit card purchases per month (of any amount), but most of those have vanished. For awhile, I would buy lunch every day with two separate debit cards to get 6% interest on $50k, but those days ended mid-last year (though they lasted longer than I thought).

5) Keep an eye on CD rates. What I've found throughout my three years of doing this is that good CD rates will come along and be gone very quickly -- often in less than a week -- so you have to have a sharp eye to get the best rate. Back when banks needed quick capital, Countrywide, WaMu, etc. used to offer insane short-term CD rates that were here and gone in a couple of days.

So far, I haven't gone the short-term bond route because there have been noticeable fluctuations during the worst of the recession, and with my luck, one of them would occur the day before I needed the money. But if we don't buy this year, I may consider it because the lack of interest is killing me.

One of the reasons buying has become more attractive this year is that the last of the 5-point-something % laddered CDs I set up in 2007 is coming due. After taxes, the net return on my "former house cash" is less than 1%, so I don't really care if there's no property appreciation for several years as long as the own-to-ratio is fairly even.

Thanks, Lad!
Yeah, I can't believe the rates. I was so happy to find a buyer for our place--and now I'm thinking we would have done better renting it out.

ING direct. Links to your checking account, super easy, and rates are always near the top (folks that beat them are usually just temporary, and then fall behind). I actually got a 2% one year CD last month.... though I use it mostly with the money market.

Vanguard Short-Term Tax-Exempt Fund Investor Shares (VWSTX)

Current distribution yield is 1.43% fed tax free (about 2.25% equiv.)

ING is only 1.5% for 1yr and ally is 1.64%

How much $ are we talking about? It appears you want a brick & mortar investment, in which case do not expect more than 1.25% unless you have $250k+ to put to work

"Where do local banks advertise?"

pennysavers? Definitely in the newspapers.
Community National Bank had a 2% rate for a checking account. Don't know if they still offer it. My last statement shows it's gone down to 1.75%. Still not bad.

lad - I think you mean half a percent or 50 bps...

"If you are willing to take on a little risk for about half a basis point"

Oops, yes, that's what I meant. Started to edit and didn't finish :o. The GE Interest Plus tends to have a half a percent higher yield.

And while I'm a huge fan of ING in general, their savings and CD yields have lagged both Ally and Discover consistently over the past three years. The process of opening and closing a CD, as well as their user interface, is far superior with ING. No phone contact is necessary at all.

Truth-CNB does not offer a checking account with 1.75% interest...highest they offer is 0.90%

DO not take anything here people say for granted...DO YOUR OWN RESEARCH

Power Plus Checking - Tier III 0 0.900% 0.900%
$50,000+ accounts; service charge $15.00 per month if balance under $10,000

surprised I'm the first to post this:

http://www.bankrate.com/checking.aspx

they list the latest rates. Of course, beware of "temp" rates if its not a CD...

Apologies! It was not my last month's statement!
I have some shopping to do.
{but i never said not to do your own research aptboy}

See that's what banks do,they depend on your laziness.

Apt Boy, 2.25% is the best number I've seen so far. And I have a Vanguard account already. So I like this idea a lot. But I don't really know bonds. If I go this route, what do I need to be on the lookout for in terms of the economy? Should I get out if I read in the paper that the Fed is raising rates?

If you decide to ladder CDs, and you want the convenience of shopping in one place, with FDIC insurance, and guaranteed repayment on maturity (very important to me--no rollover due to lack of action, which you can get when shopping at a bank), you should try brokered CDs. Walk into any broker, like Charles Schwab, which has no minimum to opening accounts. You can see a partial schedule of CD rates even as a non-customer at www.schwab.com

I keep my downpayment in short to intermediate-term muni bond funds. I can afford a modest possible principal loss if interest rates rise sharply. In the meantime, I get the benefit of significantly higher yields than the almost non-existent money market yields.

It's a balancing act.

Charles Schwab also has High Yield Checking is currently 0.60%, and High Yield Savings is currently 0.75%, both with their bank, no minimums, and deposits are FDIC insured up to $250,000,

Disclaimer: This is not financial advice, just simply an opinion. Perform your own research before making any financial decisions.

For short term munis, things to look out for:

1) Rise in short term rates that will reduce principal. As rates are not expected to rise anytime soon, this risk is very managible.

2) Risk of default on underlying bonds. More of a concern due to gov't budgets, but short-term bonds have less volitility than long-term and if you are in a very large and diversified fund, this risk is managible as well.

In any event, these funds provide daily liquidity. So, if for any reason, you want to get out, just place your redemption before 4pm and you are out (of course, barring a run on the fund, which is a risk that was seen with auction rate notes)

I would advise that if all of this is over your head, then either higher a trusted advisor or simply put the $ in CD's and sleep at night.

Again, it depends on the $ involved. If is it only 200k, than 1% in extra interest (2k, and 1k after tax) is not worth worrying and losing sleep. If it is $1mm, than the interest becomes more meaningful.

Thanks again, Apt Boy. I wish I was trying to figure out what to do with a million. No, it's only low 6 figures, so I think I'm going to go with the original suggestion of putting it in CDs.

MONEY MARKET Deposit Account (MMDA)
$1000.00 MINUMUM BALANCE
$25.00 min.balance to earn interest
*Balances between $1,000 - $49,999 1.000%
*Balances between $50,000 or More 2.000%

http://www.geddesfederal.com/sub/savings.cfm

Anyone heard of this bank?

Ghetto!!

Truthskr10, If you don't live within 150 miles of one of their Syracuse branches, you cannot open an account with Geddes Federal. Don't bother

LOL, well you don't need to brunch there.

PMG
combine that with ghetto and the rates may as well be 4% I guess. :)

ValB, make sure to spread it out over more than one bank to keep it under FDIC limits. It's currently $250K, but will revert to $100K in the future (research the date), so keep track of it as the CDs mature.

I remember towards the beginning of the crisis, weak banks would give stupid-high interest rates (3.5%) to attract deposits to buffer themselves against liquidity issues, and bank regulators had to beat them down. Short story: small banks may offer the best rates, but the Fed will let them go under, and you may well be SOL if you're not FDIC-guaranteed, so make sure to stay fully-FDIC-guaranteed. With the big banks (e.g., Citi), Fed is least likely to let them go under (as current support is demonstrating), so in theory the best place to park $10M cash if you can't be bothered with splitting it into 40 accounts and/or buying CDS protection on it.

Thanks, inonada.
I walked 40 blocks up the upper east side tonight, looking for local banks. Of course, the one I found was just down the street from me: Carver Federal Savings. It says on its website that jumbo CD rates are negotiable. I'll post here if it turns that that means they'll match the best rate out there.

Some banks are paying better interest on ordinary savings accounts than than the piddling yield on CDs. Check out Apple Bank. I'm around the corner from Carver Federal Savings as well; I've been thinking about closing out an account with one of the "too big to pay a decent interest rates" and parking it in a community bank.

FDIC ONLY insures principal, NOT interest. So if a small bank you never heard of goes under, the FDIC may reset the interest much lower. So beware...

Yesterday's NY post had a 1.25% rate for opening a checking account at Flushing Savings Bank.
Didnt read the fine print, would likely revert to a lower rate after 90 or 120 days.
Cd rates were over 2% but I think those were long term (over 1 yr)

Ally has a 2yr CD @ 2.05% with a one time option to increase the rate if the current rate is higher.

Sounds like one of the better deals around, but stay below $250k

Get a certificate of deposit with our highest fixed CD rate for a fixed term.

Open with $0
No monthly fees
With our 2 year CD, you have the flexibility to raise your rate once
Get the best rate we offer with Ally’s Ten Day Rate Guarantee
Daily compound interest for maximum earnings
FDIC insured. Maximize your coverage
Automatic renewal at maturity
Ability to withdraw and receive earned interest as income—just let us know before the maturity date or by ten days after

A good resource is the FatWallet Finance Forums - they've got a regularly updated list of the highest yielding liquid accounts available. I think some place called Incredible Bank is tops right now with a 2.02% rate. I've got money stashed at EBSB Direct currently earning 1.67% (was 2.81% when I opened) but still one of the better rates out there.

Confirmed; today's NY post page 23 has Flushing Savings Bank with 1.25% checking account guaranteed for 90 days. After that all bets are off.
18 month cd 2.1%
24 month cd 2.25%
minimums on all, 5K in th account.

And you can't find this rate for Flushing Bank on the internet, probably to make sure the numbers stay local. A small example of why you can't just rely on what you can find on the internet.

I've been moving from all my CDs as they expire to here: https://www124.americanexpress.com/cards/loyalty.do?page=one.highyieldsavingsaccount. Still can't believe it hasn't gone down in more than 1 year, but as long as it keeps going I'll keep taking advantage of it.

inspired by this thread i went looking at small banks in the mid-atlantic...found one offering 55% of prime rate as a money market account....

and if you make 12 transactions a month pay 3.45% interest on checking acct up to 25k, with 1.0% above 25k (but drops to zero basically if dont do 12 things in a month with the checking account)

again, best answer is still...

www.bankrate.com

that didnt pick up the juicy local banks...

amex says it is no longer taking new applications for those cards linked to savings accounts

http://www.fatwallet.com/forums/finance/783099/

Nationally available rates.

yeah, I don't think this is a good sign...

"Variable rate effective as of April 15, 2008"

"yeah, I don't think this is a good sign...

"Variable rate effective as of April 15, 2008""

It's the rate I'm still getting... though I agree that if they are no longer taking applications for those cards, it's not of much use to anyone else here.

apparently if you designate a beneficiary in the event of your death, you can get fdic up to 500k....

searching out cds is such a hassle but there are many deals around (ranging up to 3% at suntrust, for example, for three years), but i've opted for a money market at 1.79% because of the flexibility, and not too bad rate

Can aboutready inherit her husband's law degree?

my corp bond fund (van inter term, 4.2% yield, 5 year duration) was up 20% last year, still holding up.....should i run or add to it (taking funds out of money market earning 1.8%)?

Jimmy,

I would move half to munis and liquidiate as soon as the Fed starts raising rates (2011??) These returns have nothing to do with credit quality, but lack of alternatives for investors. Once people start withdrawing, the MTM of the bonds will plumate along with your NAV.

munis? we've got municipalities going bankrupt...

apt_boy, you're worried about gov bonds but not muni bonds?

I ask because I'd like to get safe muni bonds, not to be a jerk.

He said it is in a CORP bond fund...not a govt bond fund

and somewhereovertherainbow...please point me to the last Muni default...and on top of that, the last default in which an investor didn't untimately get all proceeds back

I use Vanguard's Intermediate-Term Tax-Exempt Fund.

Yield: 2.8%

AAA: 29.8%
AA: 40.3%
A: 25.0%
BBB: 4.4%
NR: 0.5%

Average maturity: 6.3%

100-day annualized volaility: Currently just under 2%.

Expense ratio: 0.20%

A good, conservative, low-cost trade-off between risk and return.

Should read:

Average maturity: 6.3 years

topper, any reason for intermediate vs long term vs short term?

not too soft, not too hard...just right

and why you didn't choose NY exempt?

Not that I need to explain myself, but I am in Vang NY long-term tax exempt (no short/inter avail) and national short term tax exempt...blended maturiy of 3.5 yrs and yield of 3.25% tax free = 6% taxable equiv, daily liquidity.

daily liquidity...ha..are these auction rate securities?

If so, no guarantees in life my friend. When the shit hit the fan at Citi, it took me 9 months to liquidate my "liquid" tax free nuveens.

truthskr10, can you expand on that liquidation? why 9 months?

I was sitting on 300K in NYC tax free nuveens stacked for each day, mon/tues/wed, etc. at Citibank.
Was pitched as if it was as good as a money market savings account.
When the shit hit the fan, there was no market. I was stuck (thank god didn't need the cash) but it took a period of 9 months for them to clean out (buy back) these funds when the govt bailed them out.
I still don't know exactly what happened, Im not in tune to this business. But they were trickling down the outstandings. Each unit was 25K. 3 months later, I'd see 2 units liquidiated, 3 months later another 3 units, etc. It took 9 months for the last 2 units.

I'm sure someone more savy in the biz can explain exactly what this was about.

truth - no, there hasn't been an ARS issued in 2 years...BOND FUNDS...Vang is conservative, NUVEEN uses leverage...can't deal with you jokers

Truth, if you read the prospectus on those nuveen auction rate preferreds, you wouldn't have considered them liquid in the first place. Those securities were sold, not bought. I wouldn't put a friend in an intermediate or long term bond mutual fund right now, because of the interest rate risk. Those bond fund values, like the auction rate preferreds could plummet if interest rates spike. I think it is safer to ladder into actual bonds or cds and avoid paying premiums. That way, the bonds may temporarily decline in value, but if you invest safely, you get your principal returned at maturity. The public now loves bond funds, which is a really bad indicator of future performance.

aifamm
http://www.investmentnews.com/article/20080421/REG/314671176

Like I said apt_boy, Im no expert in the trade. But ok Vanguard is better, whatever. Every banker tells everyone why this or that product is so great and this or that CAN'T happen.
This Nuveen fund was touted as conservative.
Just giving everyone a proper reminder, if it's not a plain vanilla savings or checking account...it is NOT cash.

I tend to agree PMG. You really have to shop for CDs but I did find one 3 year term with 3% interest, but I'm debaating whether to lock up for that.

aifamm,

It comes down to risk/volatility.

Long term tax-exempt bond funds are far more volatile than shorter term ones.

Too much risk for me - maybe not for you.

If I plan on buying in the next few years I don't want to have a big mismatch between the maturity of my assets and my future expense. Many would say an intermediate-term fund is already a pretty big mismatch. I'm willing to take that modest mismatch risk.

Alas, as you note, Vanguard does not offer a short or intermediate-term New York fund. And they are certainly the lowest cost provider which is a big deal to me.

truthskr10,

I believe the securities you own were adjustable rate securities that Nuveen and others used to raise money so that they could leverage their closed-end fund muni bonds. They are pretty much history now.

PMG
LOL, ya who read the 40 page prospectus in 2006.
They were pitched to be as liquid as astro glide.