In this market, putting your cash under a mattress may appear more promising than an investment, but bond exchange traded funds (ETFs) and a few other places, are offering a safe place and a decent yield.
Katy Marquardt for US News & Workd Report has five ideas on where to stash your cash.
- Money market account: Bank products are offering a safe place to park your cash and offer the appeal of security. You can find yields of 3.2% to 2.6% right now. FDIC insurance covers you up to $250,000.
- Certificates of deposit: CDs used to sound dull, but they are sounding quite rosy in these markets. With these investments, you trade liquidity—or easy access to the money—for a fixed interest rate over a set period and you get the FDIC insurance, risk-free.
- High-yield online savings account: Internet based banks have a low overhead so they offer competitive rates versus traditional branches. The best rate is 3.3% so far. And, yes, you get FDIC insurance as well.
- Bond ETFs: The transparency in an ETF is unbeatable and playing it safe with a Treasury right now is the way to go. Although there is not FDIC insurance, holdings are backed buy the federal government, so investors can sleep at night. iShares Lehman 1-3 Year Treasury (SHY) offers 3.3% now.
- Municipal bond funds: For upper-tax bracket citizens, the muni-bond is a good bet. With munis, investors get the benefit of tax-free income, less volatility than corporate bonds, and more safety. Munis come in ETF form such as the iShares S&P National Muni Bond Fund(MUB) which yields a tax-equivalent of 5.7%.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.