Short term money saving strategies

What are good places to park money for the short term? Where to Put the Money?

The 7 Best Places to Put Your Savings https://www.investopedia.com/financial-edge/0810/the-7-best-places-to-put-your-savings.aspx
How to Invest Your Emergency Fund for Liquidity https://www.investopedia.com/ask/answers/13/safe-liquid-investment-for-emergencies.asp
The Ultimate Guide to Safe Investments for Achieving Short-Term Goals https://www.investopedia.com/the-ultimate-guide-to-safe-investments-for-achieving-short-term-goals-11745427

e.g. scenarios:

How to put 18K in bonds and pull them out at a certain date (when you have to make payments for something else) two years from now?
How to put 14K in bonds and pull them out when it is time for yearly payment for the Life Insurance Policy (based on a schedule like) once in March of next year, once in March two years from now, and the last time in March three years from now?

Whatever your choice is, you need safe (FDIC insured) , liquid options so that your money is accessible in times of need. These choices should make it harder for you to dip into it (face it: you’ll be tempted to from time to time), and you’ll also earn a bit of return on the money.

The maximum insurable amount in an FDIC-insured bank account is $250,000 per depositor, per bank.

First, you’ll need an emergency fund placed in T-bills, CDs, or money market accounts; this should be enough for six months of living expenses, and should be in a taxable account. (Putting your emergency money in a 401(k) or IRA is a terrible idea, since if you need it, you’ll almost certainly have to pay a substantial tax penalty to get it out.)

Money market funds and high-interest savings accounts are two good places to park your emergency fund.

TODO

Create a table with an arbitrary number (like $10,000) and arbitrary earnings or interest rates for each of these methods and tabulate them. That should help with comparison.

High-yielding Savings Accounts

Experts generally advise building short-term savings and then investing whatever surplus cash you have left over. High-yield savings accounts are a great option for saving because they come with zero risk. An FDIC-insured savings account is nearly risk-free for short-term savings and is not subject to market fluctuations.

But high-yield savings accounts aren’t just to used for emergency savings. They’re also useful as you’re trying to save up for certain financial milestones. A high-yield savings account can serve as a rainy day fund, but also an ‘opportunity fund’ for sunny days.

The Secret Big Banks Don’t Want You to Know About Your Savings https://www.investopedia.com/the-secret-big-banks-don-t-want-you-to-know-about-your-savings-11803494

T-bills and T-notes

Bills are sold at a discount; when the bill matures, it will be worth its full face value. The difference between the purchase price and the face value is the interest. For example, a $1,000 bill might be purchased for $990; at maturity, it will be worth the full $1,000.

Treasury notes, on the other hand, are issued with maturities of two, three, five, seven, and 10 years, and earn a fixed interest rate every six months. In addition to the interest, the T-notes can be cashed in for the face value at maturity if purchased at a discount.

Both Treasury bills and notes are available at a minimum purchase of $100.

How Can I Buy a Treasury Bill?

You can buy U.S. Treasury bills from the government through the TreasuryDirect website. You’ll need to register and open an account. When you do, it will function like a brokerage account that holds your bonds. T-bills are auctioned on a regular schedule.

Cons: Treasury bills can be a good choice for those looking for a low-risk, fixed-rate investment that doesn’t require setting money aside for as long as a CD might call for. However, you still run the risk of losing out on higher rates and returns if the market is on the upswing while your money is locked in. The good news is that you can sell a T-bill before it reaches maturity without penalty.

Certificate of Deposit (CD)

Money market accounts (Money Market Deposit Accounts )

How are these different from high-interest savings accounts?

Money market funds (Not the same as money market accounts)

https://www.investopedia.com/terms/m/money-marketfund.asp

A money market mutual fund is a type of mutual fund that invests only in low-risk securities. Interest rates are not guaranteed. These are not covered by the FDIC’s federal deposit insurance, while money market deposit accounts, online savings accounts, and certificates of deposit, are covered by this type of insurance.

Tax lien certificates

In another example, I hold a small portion of my assets in tax lien certificates instead of CDs. I earn 16 percent per year on my money, which certainly beats the 5 percent the bank offers. The certificates are secured by real estate and enforced by state law, which is also better than most banks. The formula they’re bought on makes them safe. They just lack liquidity. So I look at them as 2 to 7-year CDs. Almost every time I tell someone, especially if they have money in CDs, that I hold my money this way, they will tell me it’s risky. They tell me why I should not do it. When I ask them where they get their information, they say from a friend or an investment magazine. They’ve never done it, and they’re telling someone who’s doing it why they shouldn’t. The lowest yield I look for is 16 percent, but people who are filled with doubt are willing to accept 5 percent. Doubt is expensive.

The 16 Percent Solution, by Joel Moskowitz

Bonds

High-interest savings accounts and regular savings accounts

https://www.investopedia.com/articles/pf/09/high-yield-savings-account.asp

Look at the page above for more details like:
High-Yield Savings Account vs. Checking Account
High-Yield Savings Account vs. Traditional Savings Account
High-Yield Savings Account vs. Money Market Account
High-Yield Savings Account vs. Certificate of Deposit (CD)
High-Yield Savings Account vs. I Bonds
High-Yield Savings Account vs. Treasuries
High-Yield Savings Account vs. Bond Funds
High-Yield Savings Account vs. Money Market Fund or Cash Reserve Account
How to Choose a High-Yield Savings Account

Who Should Get an Online High-Yield Savings Account?

Anyone with surplus savings in the bank can benefit from a high-yield savings account. If you have more money in the bank than you need to hold in your checking account, online high-yield savings accounts offer a way to sock some of those funds away to earn more interest. High-yield savings accounts are also best for those comfortable with online banking, as moving money in and out of a high-yield savings account must generally be done online or through a mobile banking app.

Pros of High-Yield Savings Accounts

Higher APY than traditional savings accounts
Ability to withdraw or deposit funds at any time
Extremely safe, with virtually no risk
Excellent vehicle for an emergency fund or saving for a big goal - because money is not locked out of reach in case of emergencies and at the same time, it will earn interest on the deposit.
In times of rising rates, your APY may go up

Cons of High-Yield Savings Accounts

Earning a top yield may require opening an account with a new institution
Some accounts have withdrawal limits of six per month
Easy access can make it tempting to dip into savings
Account could have a fee or minimum balance requirement
In times of decreasing rates, your APY may go down

What is the difference between regular savings accounts and high-interest savings accounts? High-yield savings accounts earn a higher interest rate than a standard savings account. But they usually require a larger initial deposit, and access to the account is limited.

https://www.investopedia.com/how-to-open-a-high-yield-savings-account-4770631

With a $6000 deposit, if we leave it in a high-interest savings account (Citi Accelerate Savings), this is what the numbers look like:

Rate & Interest Details
1. Annual Percentage Yield - 3.85%
2. Interest Rate - 3.78%
Tool used to calculate the results: https://www.axosbank.com/Tools/Calculators/APY-Calculator
Ending balance: $6,114.47

So, in six months, the return seems to be $114.47

Cons: The interest rate is variable, meaning it can go down. Some banks may also charge fees for these accounts.