Are you saving money for your dream home? You can invest your cash while waiting to earn interest and preserve your capital. Below are good and safe options for you to consider to guard your money and still have it growing.
1. FDIC-Guaranteed Bank Accounts
These are your standard bank accounts. You can store your cash in a savings account or checking account. The money will be readily available anytime you need it and there are no withdrawing penalties. However, your cash will earn little to no interest and it is likely that it will not keep up with inflation.
2. FDIC-Insured Certificates of Deposit
A certificate of deposit or CD is a special type of contract where you lend money to the bank for a specific amount of time for a guaranteed rate of return. The longer your money stays with the bank, the more interest it will pay you. If you know you will not use your down payment for quite some time, a CD is a good investment. Just know that withdrawing the money before maturity has steep penalties. The bank can charge you up to six month’s worth of interest as penalty!
3. U.S. Treasury Bills
This is probably one of the safest places to put your down payment ever. Each treasury bill is backed by the full taxing power of the government so you are guaranteed not to lose. Go for this option if you already have sizable savings, such as $10,000 or $20,000.
4. Money Market Accounts
Compared to a regular savings account, a money market account from your local bank yields higher interest rates. These are also insured by the FDIC. Note that you want to invest in a money market account, and not a money market fund.
5. U.S. Savings Bonds
Another long-term option is U.S. Savings Bonds. Investors are guaranteed never to lose principal. These come in two types: Series I savings bond and Series EE savings bond. If you are more than a year away from needing your down payment money, these bonds will give you very good benefits and will definitely be worth your while.