I own a house that is 75 years old and needs a lot of work done to it. I have been setting aside money from each paycheck for the past couple of years into a savings account earmarked for that purpose so that I don't have to take out loans. When the account is large enough to do a particular item on the list, I pay cash for it. For example, the next items on the list are siding repair, repainting, and tree removal. So I've saved up about $6000 to cover those items which I'll be doing in the next couple of months.
I'm concerned about whether or not this is the best way to go about this though. While I'm building up that account, that money is just sitting there collecting a paltry 1% money market rate. I've been doing it that way because A) a savings account is liquid and I've had to tap it as an emergency fund before, B) I make deposits to it every month, and C) the account gets drained as soon as I can afford the next item on the list (usually only 9-12 months).
I figure that money should be doing more than just sitting idle in a savings account. Even straight index funds grow at about 6-7%. But I don't know anything about investing.
Is it appropriate to invest small amounts for short periods of time? If so, how do I go about doing so? Will fees negate the benefits? I need the flexibility to make deposits regularly and to cash out when I've reached an objective.