Good place to put down payment money while searching.

[Adam Frantz]

My wife and I just got the money from our refi and now have a big chunk of change in our checking account. While we are excited to get our first property, we are still searching for the right one. My question is: Does anybody have a good recommendation about where to place this money while we are in search mode? 

We can leave it in the checking account but there is very little yield on it and makes it hard to know how much other money is in there from our incomes and expenses. We don't really want to draw down any of the investment money to pay bills by accident. A money market account seems like a good possibility but we are unsure about the accessibility for when we need to pull it out. 

Any advice would be appreciated.

Thanks

[Aaron W.]

@Adam Frantz For money you are waiting to invest, you should be as liquid as possible, so when you are ready to use it, you can get to it quickly. Being liquid does affect the overall return on the funds; however, the purpose while it is being held is to preserve the capital for a larger investment. There is a give and take with this.

You could consider putting it in a high-yield savings account that offers a higher interest rate than traditional savings. Many online banks offer this and is where we put our funds as well.

Another option is to put it in a brokerage account and invest it until you are ready to buy your property. This will give you highest upside but there are also risks of losing capital should the stock market go down. There will also be capital gains taxes you will have to pay on any gains to the funds you invest. If you net more than what you would get by leaving it in the bank, then it may be worth considering. 

These are just a couple options to consider. Best of luck!