Investing Escrow For Annual Property Tax

[darkelenchus]

So we received the balance of our escrow from the bank the other day. Since this is already earmarked for annual property taxes and insurance, we were thinking of putting it in a short term, low risk investment vehicle that would at least give us a return above inflation. My first thought was TIPS, but was wondering if there might be anything better. Any suggestions?

Also, how do those of you who pay our property taxes handle savings? Do you treat it as a monthly expense, and let it build up in a savings or checking account? Or put the money in a higher return but short term investment vehicle?

I should say that Milwaukee County and City Property taxes are kinda high, so it'll be around $3,500 invested.

[gooki]

Also, how do those of you who pay our property taxes handle savings? Do you treat it as a monthly expense, and let it build up in a savings or checking account? Or put the money in a higher return but short term investment vehicle?

My property tax is paid by direct debit every month to my local council. So check to see if you have such an option.

[Secret Stache]

My property tax burden is about the same as yours.  I have just been keeping that money in a normal savings account not gaining much of anything.  I hated having an escrow because every year they would give us a refund and every year they we re-assess and decide that we needed to pay another grand into the escrow or increase our payment by $100. 

[darkelenchus]

Thanks for the responses, guys. We went ahead and opened a high-yield savings account after reviewing our options. Investing the money for the short term turns out to be too much hassle for too little return, at least with the way things happen to be right now.