Ask the Expert: Investing $100,000 for a Short Period of Time

Q: How can I invest $100,000 for a short period of time at a good rate of interest?

A: There are two key components to your question: the amount of money involved, and the period of time you have in mind.

Regarding the amount of money, the fact that you have $100,000 to work with is significant for two reasons. First of all, with FDIC protection limits having been raised from $100,000 to $250,000 (at least through the end of 2013, and pending legislation would make the higher level permanent) you don't have to worry about the interest you earn putting you above the limit. Thus, you don't have to worry about breaking up your deposit -- you can confidently put it all with one bank.

The second important thing about the $100,000 figure is that it qualifies as what is called a "jumbo deposit," which may make you eligible for a higher rate. As compare banks, be sure you check whether they offer a special rate for jumbo deposits.

This brings us to the period of time you have in mind. If what you mean by a "short period of time" is less than six months, a money market account is probably your best bet. Money market accounts typically offer higher rates than savings accounts, and right now money market rates on average are higher than one-month or three-month CD rates. Money market accounts also happen to offer especially strong premiums for jumbo accounts, on average.

If you are looking at six months or longer, you may find that CD rates are higher than money market rates. So, the first thing is to decide more specifically on a time period. Then, search the CD and money market account pages of MoneyRates.com to compare rates.

Got a financial question about saving, investing, or banking? MoneyRates.com invites you to submit your questions to our "Ask the Expert" feature. Just go to our home page and look for the "Ask the Expert" box on the bottom left.

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