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What would be a better investment, considering the short terms needs?

A few ideas-
1) Better money market. Net.b@nk is currently offering a yield of 5.13%. Others certainly offer a similar rate.

1) A tax-free money market. Very liquid, no taxes. For the year ending in March, avg. yield on these was 2.8% (Lipper Tax-Exempt Money Market Fund Average).

2) CD's. If you buy a "ladder" of CD's, (i.e. 1 maturing in 3 months, 1 in 4, 1 in 5, etc), you can get 5-6% pretty easily. These are less liquid than the money market, and you'll generally forfeit 1-3 months of interest if you cash them out early. This may or may not be an improvement, depending on how likely this is.
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