As you consider your options for short-term investments, keep three key items in mind.
1. Yield: The accounts with the highest yields typically require you to maintain a minimum balance. "Teaser" rates may apply to the first few months but drop after that. Additionally, that high yield may only apply to balances under a certain level, and you'll earn less if you hold more than that.
2. Liquidity: If you're willing to tie up your money for a predetermined time—as with certificates of deposit—you'll usually be able to earn a higher return.
3.
Guarantees: FDIC-insured accounts protect you from a loss, up to $250,000 per depositor per institution. These include checking and savings accounts, CDs, money market accounts, and online savings accounts. Money market mutual funds aren't FDIC-insured, though funds that invest in Treasury bonds are buying securities that are backed by the full faith and credit of the US government.
Surveying the Field of Short-Term Investments
