Best 6 month investment

Let’s say I’ve got $100k right now and in 6 months I will need every penny of it for the down payment on a new home. Today it’s sitting in a savings account with a decent interest rate, over 1.5%. Is there a better low risk investment to maximize growth for such a short term? Or, what if I were willing to take a little bit of risk?

It looks like there are some online money market accounts paying a little over 2% today.

The highest-yielding one will net you only an extra $300 over the six months if rates on the savings account and the money market are unchanged for the whole period. These accounts are generally not FDIC insured so there is a little bit of investment risk. Maybe that’s worth it to you.

You could also buy 6-month Treasury bills. They are yielding about 2.18% as I type this, so you’d potentially make a bit more than an extra $300. Your ability to get that rate will depend on the price at which your dealer will sell Treasuries to you. Treasuries are safer than bank accounts since they are directly backed by the U.S. government. You’d have to open an account with a broker-dealer if you don’t already have one. The account maintenance fees might eat into your profits a bit.

Treasury yields are here, 6 month is currently 2.27%. Federal tax but no state tax on that.

$100k is a large enough amount that you could open a brokerage account and get within a couple of basis points of that with no fees or expenses in maintaining an account. Fidelity is a good choice, they have a good online dealing platform for treasuries. If you don’t plan to need a brokerage account after 6 months, you’d have to decide for yourself whether it’s worth the hassle of opening an account for an extra few hundred dollars, you might need to close it to avoid fees if your balance is going to drop to zero or a much lower figure.

There’s also Treasury Direct, I don’t know how easy it is to set up and use.

$100k is below the FDIC insurance limit, so it might be simpler just to find the best rate you can for an FDIC-insured savings account or CD, even if it’s below the treasury yield.

If you need the money in 6 months, there is no risky investment that makes sense. Equities have historically always outperformed bonds, but only if you look at much longer timeframes (decades), in 6 months you could lose half your money.