Invest amount for annual property tax payment?

[skiddieleet]

Hi everyone,

I just finished refinancing my home, and now I am responsible for my property taxes and insurance payments.  My current plan for the annual property tax payment (~$6500) is to put it in a 0.99% APY savings account.

I'm planning on a savings account because CDs are about the same rate anyway and I don't think investing is a smart idea for a sum of money you need in a year or less.  I'm writing here to make sure that is the case.  Is there something else I could do with this $6500 that will have a higher yield and little to no risk?  Googling I couldn't really find any strategies for this.

Thanks,
Steven

[onecoolcat]

I wouldn't invest that money.  Savings account seems like a good idea.

[waltworks]

If you have a large investment portfolio, you don't need (or want) to set money aside. Just sell some holdings each year to pay the tax. Yes, you'll sometimes sell low. But it'll average out and having that money in the market will beat having it in a savings account over the medium/long term.

If you don't have a pile of money invested and could end up unable to pay your taxes in the case of a market crash or something, then go savings account.

-W

[skiddieleet]

I'm just starting to build up my non-retirement investment account.  That sounds like a good strategy in a couple years when I've got some significant money in there.  Thanks for the responses.

[Retired To Win]

I wouldn't invest that money.  Savings account seems like a good idea.

I concur with this.  You need that money to be pretty liquid, and you don't want to see it diminished by some market downturn.

One way to do this is to put into that savings account each month 1/12th of your tax bill.  You will, in essence, be setting up your own escrow account.

Gotta pay those taxes, you know.