Anywhere safe - ING direct or your local bank. You don't want to risk losing it.

We are also planning to buy in the next 1-2 years and moved a chunk of our downpayment savings from high risk index funds into our online savings account through ING/Capitol One 360). It only gets about 0.8% interest, but we couldn't find any CDs or other low risk investments with better rates. Sad though, when I opened the ING account 6 years ago I was getting 4% interest!

We use an Ally account. I'm only getting .85% right now though. It sucks.

These rates are ridiculously. Crazy that I pay 13% on credit cards, never been late, yet we can't or don't trust each other enough to cut financial intermediaries out.
Roth IRA?

Rates are low everywhere so we debated this, too. We keep savings in a "high yield" savings account. The interest rate is pretty pitiful actually (I think around 1%) but it was comparable to CDs and we want to be able to access it if an emergency comes up.

Anonymous wrote:What is the purpose of losing access to your money for a year in exchange for $140? Forgive me if I misunderstand how it works.

To me that's a good deal, as I have absolutely no expectation of needing the money within 1 year, and I will continue to earn higher rates of interest indefinitely into the future. So if the OP puts away $40,000 over the next 3 months, and then holds off buying a house for 4-5 years (because the stars did not immediately align), that is $2500. YMMV

What is the purpose of losing access to your money for a year in exchange for $140? Forgive me if I misunderstand how it works.

If you know you don't need it for at least 1 year, you could put a chunk in ibonds (limited to 10,000 per year per person, they cannot be cashed in before a year, and before 5 years you owe a penalty of 3 mos interest, but the rate is pretty good-- variable but currently 1.4%)

I keep any money I think I may need in the next three to four years in a savings account or bank CD. At this point the interest on CDs is so low that it is generally not worthwhile locking up the money. There are some online banks that have somewhat higher interest rates on savings accounts than the banks with offices in the Washington area, but basically interest rates are really low right now. Better means .8% instead of .2%.

I don't know of any other investments that don't have any risk of going down. I keep most of my retirement money in the stock market because I don't expect to need that money in the next three to four years, but I wouldn't do that for funds that I think I will need in the near future. Of course, if you like to gamble you may get lucky. Anyone who put money in the stock market three or four years ago is doing very well right now.

under your mattress

Saving for a down-payment - we might buy in 2 years if stars align or keep renting if not. Have a chunk of downpayment in savings now earning close to nothing - where is a good place to keep down-payment savings - regular bank acct or is there a low risk investment fund of some kind that's good for this purpose? Thanks!