3. Rebecca has saved $12,000 for her college expenses by working part-time. Her plan is to start college next year and she needs all of the money she saved. Which of the following is the safest place for her college money?
a.) Locked in her closet at home.
b.) Stocks.
c.) Corporate bonds.
d.) A bank savings account. Or even better, a short-term CD or an online money market account. As the Fed lowers interest rates, the interest onbank accounts, CDs, and money market accounts plummet.
Stocks are too volatile for a short-term investment and corporate bonds tie up the cash for too long of a period. Inflation would erode some of the value of the $12,000, but in the short-term, it is the second best option.
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