ASK KIM
Best Bet for Short-Term Savings
by Kimberly Lankford

We're off to travel the world for a year. We have about $80,000 sitting in our savings account, which we want to use to purchase a bigger house when we return. Where can we stash the money for a year to earn some interest?

Your best bet is a certificate of deposit. Yields on short-term CDs are the most attractive they've been in a few years. Several banks pay about 4% for one-year CDs. See our Yields and Rates page to search for the highest yields available in your area.

If you're in a high enough tax bracket, you might be slightly better off with a municipal bond. Some high-quality munis recently yielded 2.5% to maturity in a year.

If you are in the 35% federal tax bracket, that's the equivalent of a 3.8% yield from a taxable bond. But if you're in the 28% bracket (taxable income between $120,000 and $180,000 for married joint filers), that's the equivalent of less than 3.5% from a taxable security.