Certificates of Deposit and other short-term investment options

[Eeezee]

I have $2000 that I want to start working for me. I won't be needing it for at least 1.5 years. What do I do with it that is the most effective? Chase Bank has very nice interest rates on a 7 month CD, but what does all of this stuff entail?

Any experts or even financial hobbyists, I'm looking for advice. Don't direct me to financial websites, they confuse the hell out of me. I want layman's terms. "This account means you can't get your money back for 7 months without penalties. You will make xxx dollars after 7 months."

 

[manlymatt83]

I'd say low risk mutual funds might be a good choice, but thats just me. Otherwise, CD's are good.

 

[Brainonska511]

Well, you can put your money into a CD account for the 7 month term. You can't touch it for that time without incurring penalties. After the 7 month period, there will most likely be some kind of grace period where you can access the money and decide if you want to lock it in longer or shorter time frames. If you don't do anything during the grace period, they will probably lock your money back up for another 7 months. (This is all based on my experiences with Northfork/GreenPoint bank, so it may not necessarily be the case with Chase).

 

[DaveSimmons]

For just $2K and 1.5 years, either a CD or a savings account at INGDirect.com. A 1-year CD would earn a couple of dollars more [ than savings ] but you have the extra work of changing the term or cashing out at the end of the year.

With the savings account you can add more money, and you can remove money after 14, 16, 18 months and if you're doing well you can leave part of the money in to keep growing.

Mutual funds: I wouldn't recommend even my beloved VFINX for just a 1.5-year term.