Question about CDs (not the music)

[Lathum]

I know we have some financially savvy folks here. I detailed my wifes employment situation in the mental health thread, but basically they sold her company and gave her a lucrative package.

In addition to her full bonus, in March she will also be paid out on a couple long term executive bonuses we had previously deterred, so we will be coming in to a large sum of cash.

since she will still be getting paid as part of the severance, we don't need that money so I am looking at how to maximize it on a short term basis. I'm not looking to invest in the market or anything. We already have a lot in the market and will be rolling her 40K over. I want to remain somewhat liquid with this money in case her unemployment stretches out.

I was looking into a 6 month CD and it looks like I can find one for about 4%. We already have a high interest capitol one 360 account that pays out at 4% interest so it seems a bit pointless to buy a CD when I can just park the money there.

Am I missing something? Any other suggestions for how to maximize that money would also be very welcome.

[PilotMan]

Your options are basically
- high interest savings account; you'll maintain liquidity at whatever rate you're getting. Bank can change the rate you're getting at any time.
- CD or some grouping of CD ladders where you can get a guaranteed return in exchange for limited liquidity.
- investment account; you can maintain all the liquidity in exchange for a higher risk/reward payout. Within this option you can:
--> invest in a high interest MM type account that is riskier than the bank, but also may throw off a higher rate than the bank and is generally protected up to 250k.
--> Invest in whatever various stocks, bonds, or mixture of whatever based on the risk and income you'd like it to throw off.


Look at your risk tolerance, decide when you'd like to have that money, and then try and match it to the income you'd like to see. There's not a whole lot short of some riskier bonds that you'll find in the land between high interest savings, CDs and general stock market risk. Bonds can provide you some tax protected income if you're in TIPS, and junk can throw off some higher rates.


If you're already getting 4 or 4+ guaranteed from a high value savings account you're already doing better than most. I'd consider parking it in a medium risk AI account that will allow you to cash out whenever you'd like and you can control the risk exposure without needing to really keep an eye on it. Then as you get closer to needing it, move it back to your higher interest MM or savings account for the steady gains.