Where to Put Money for 6 Months: Safe & Secure Options

For short-term funds, such as those needed in six months, the primary goal is capital preservation and liquidity, not aggressive growth. Understanding safe placement options is important for protecting principal while earning interest.

Bank and Credit Union Options

Federally insured financial institutions offer several suitable options for short-term funds, providing robust safety through deposit insurance. High-yield savings accounts (HYSAs) offer higher interest rates than traditional savings accounts. These accounts are often available through online-only banks, allowing them to offer more competitive rates. Funds remain highly liquid. Deposits are insured up to $250,000 per depositor, per insured bank, by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA).

Money market accounts (MMAs) often provide higher interest rates than standard savings accounts. They commonly include limited check-writing privileges or debit card access, offering transactional flexibility. MMAs are also FDIC or NCUA insured. They typically require a minimum balance, which can vary.

Short-term certificates of deposit (CDs) represent another secure option. CDs are time deposit accounts that hold a fixed amount for a specified period, offering a fixed interest rate. They offer higher rates than standard savings accounts, but funds are locked in for the term. Early withdrawal penalties are imposed if funds are accessed before maturity. CDs are also FDIC or NCUA insured.

Government-Backed Securities

Treasury Bills (T-Bills) are short-term debt obligations issued by the U.S. Department of the Treasury, a highly secure option. These securities are backed by the full faith and credit of the U.S. government, making them free of default risk. T-Bills are sold at a discount to their face value and mature at face value, the difference representing interest earned. Common maturities include 4-week, 8-week, 13-week, 17-week, 26-week, and 52-week options.

T-Bills can be purchased directly through TreasuryDirect, the U.S. Treasury’s online platform, allowing direct purchase without fees. Alternatively, they can be acquired through brokerage firms, which may charge fees. Interest earned is exempt from state and local income taxes, though subject to federal tax. This tax treatment can be attractive for those in high-income tax states.

Important Considerations for Short-Term Funds

When evaluating options for short-term funds, liquidity and access are paramount. High-yield savings accounts and money market accounts provide immediate access to funds. In contrast, short-term CDs and T-Bills involve a fixed maturity date; accessing funds before this date may incur penalties or require selling the security. Understanding your need for quick access is important.

Safety and insurance mechanisms warrant consideration. Deposits in banks and credit unions are protected by FDIC or NCUA insurance up to $250,000, safeguarding principal. Treasury Bills are backed by the U.S. government, considered one of the safest debtors. Both offer high security.

Comparing interest rates and returns across different products is a necessary step. Even small differences in annual percentage yield (APY) can add up, so compare current rates from various institutions and T-Bill auctions. Rates fluctuate, so checking current offerings is advisable.

Examining minimum deposit requirements and fees is important. Some accounts may require a substantial initial deposit. While many online savings accounts have no monthly maintenance fees, some money market accounts or brokerage services might have fees that could erode returns. Ease of setup can also influence your choice.