Safest way to invest 25k?

In addition to the 25k, we

Snipped for brevity.

If taxes (or tax avoidance) is the primary concern, my two best choices would be

My "rules of thumb" suggest 401k should be 10% for each- you and your wife- but this is another topic discussed in numerous threads.

There was a point in a few other responses about paying off student loans and the car. I agree with these comments. I would add to that a question- you owe 91k on your mortgage, how much of house do you own? (Is it more or less than 20%)?

Why are you "saving" $500/month- do you have a reason for this mkoney being set aside? Maybe a vacation, bigger house or other reason? If you don't "know" what this money is for, then it may be difficult to suggest to many alternatives (Money Market vs CDs vs Other).

Thanks for the responses thus far.

Since I just bought the house last year and the car this year, I do not have much equity in either. The rate on the car is 6%, house is 5.5%, and we've consolidated our school loans so they are fixed at 3.5%. The $500 is money left over after we pay all our monthly expenses. On the car, house, and student loans, we have been paying above what is due which would work out to be one additional payment each year for each of those expenses. So to answer one of the questions, there is no prepayment penalty on any of our current long term expenses. We haven't been saving the 25k for any particular cause, more just as insurance for any future expenditures. I know that my best course of action would be to pay off the car, or pay down the house or student loans. But I personally feel more comfortable with having that money liquid just in case there is any reason that I need it. I understand that the low yields that I earn on the 25k won't counter the interest that I'm paying on my expenses, but I think I've done pretty well at getting decent fixed rates so that the interest isn't killing me...guess I just accept the fact that the interest, even over long term, is the cost of doing business. So with that being said, are the CDs, MMA, and t-bills my best options?

Thanks!

While I've enjoyed reading the sophisticated strategies for maximizing return on Josh's cash reserve, sometimes I think we get a little carried away here. :-)

Josh's $19K car loan is costing him SIX PERCENT in AFTER TAX dollars. He has $25K in hand and he's looking for the "safest" way to invest it.

In my view it's a no-brainer. Pay off the car loan. There is no easier and safer way to make a guaranteed six percent after tax. Once he does that, he can come back and ask for advice on how to invest the extra cash he's not paying on the car every month.