“Laddering” CD’s is an option - if one has a very good idea of when they will need the money. The OP gave me the impression that they were looking more at 3-4 years. The drawback is that some of the the funds still sit in a checking account for up to a year before they are deposited to the next CD.
Decisions, decisions, decisions!
Just wanted to give an update that my Vanguard Wellington fund is all set up and is up 92 dollars from my original investment. I know that it’ll fluctuate daily and in a couple weeks it could be down 200 dollars, etc, and that the money is there for a while.
Just wanted to thank everyone again for the advice and give this update. Seems like it’ll be a relatively safe way to actually earn a decent interest on this money. I’d honestly rather accept the risk that I could lose value on it and have to wait for it to come back up than just let my money sit in a checking account and lose value due to inflation.
You should investigate putting your investment/savings in a Roth IRA to save taxes on the earnings. Read the rules for withdrawals without penalty [and with]. Some highlights are being able to withdraw for first time homebuyers after 5 years without problems. You also get to take out YOUR contributions at any time without penalty or tax obligation - you just get hit for taking any earnings out.
The mutual fund can/should be in the Roth.
The basic rules
Roth IRA contributions are made with after-tax dollars. Because you’ve already paid income taxes, you can always withdraw the contributions to your Roth IRA tax and penalty free at any time. That’s the simple part. But the beauty of a Roth is that the earnings can also be tax and penalty free. And that’s where distributions can get more complicated. The IRS makes a distinction between what they call qualified and nonqualified distributions. For a distribution to be qualified, that is, the earnings are not taxable or subject to penalty, you have to have held your Roth IRA for a period of five tax years and meet one of the following conditions:
You must be at least 59½.
You use the money to pay for a first-time home ($10,000 lifetime cap).
You become disabled.
The distribution is made to a beneficiary or to your estate after you die.
The exceptions
In general, if you withdraw money from your Roth IRA before you’ve met the 5-year holding period and/or before you reach 59½, not only is the earnings portion of the distribution taxable, but you could be subject to a 10 percent penalty on those earnings unless the distribution is used for one of the following exceptions:
Qualified higher education expenses for yourself and/or eligible family members
Unreimbursed medical expenses that exceed 7½ percent of your adjusted gross income
Health insurance if you’re unemployed The distribution is made in substantially equal periodic payments over the period of your life expectancy.