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Short-horizon money belongs in safe, liquid vehicles — For goals or needs within roughly three years, prioritize capital preservation and liquidity over market returns. High-yield savings accounts and short-term CDs are common choices because they protect principal and offer predictable returns. These vehicles minimize the risk of a market downturn reducing the value of money you need soon. While historically equities deliver higher long-term returns, their short-term volatility can erode principal at precisely the wrong moment. Matching the investment vehicle to the time horizon reduces the chance you’ll have to sell during a market trough to meet a near-term obligation.

How to select between high-yield savings and short-term CDs — Choose a high-yield savings account for maximum flexibility and immediate access; use short-term CDs if you can lock funds for a specific period to earn a slightly higher fixed rate. Laddering short-term CDs provides a middle ground (regular liquidity events while capturing longer-term rates). Check compounding frequency, early-withdrawal penalties, minimum deposit requirements, and whether the institution is FDIC-insured. Factor in your cash-flow needs (unexpected timing changes) and prefer vehicles that let you access a portion of the principal without substantial cost. Maintain a small checking buffer for immediate expenses and keep the bulk in the chosen short-term vehicle.

Did You Also Know...

By Quiz Coins

John D. Rockefeller is widely regarded as America’s first confirmed billionaire, reaching that status in the 1910s.

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