We have started collecting $400/month rent from our adult son and I'd like to put that into an interest -bearing secure account that I can add to every month. He is not aware that I'm saving this for him to help him save for his own place. What's the best fund or account to do this?

Your plan is terrific on several levels. First of all, collecting rent from your adult son is teaching him the responsibility of living on his own. Once he does move out he will have had the experience of paying a monthly obligation that can’t be ignored.

Saving the rent payments in anticipation of a down payment (or first and last months rent) is also a great idea. You will be able to show him the value of saving small amounts each month, and what that can mean to him in the future.

The proper account to use for this money depends on how long it will be before your son will need it. If you think he’ll be moving out within the next 3 years you probably want to leave it in a the highest paying money market fund you can find. Consider an online account such as ING Direct.

If your son won’t be moving for 4-5 years or longer, a CD or bond that matures around the time he’ll need the money will give you a little higher return than a money market. You might consider taking a little more risk and investing in a balanced mutual fund, such as the Vanguard STAR Fund or the T. Rowe Price Balanced Fund. These funds invest in both stocks and bonds. Unlike a money market fund or bond they carry a risk of loss, but also offer the potential of a higher return because they own stocks. I would not suggest putting all the money into stocks because you want to have some protection against a market downturn.