What is one step up from CDs on the risk ladder?

[jwblue]

People are telling me that CDs are not a good investment. What is one step up from CDs on the risk ladder?

IS

 

[moethepuppy]

CD's aren't necessarily a bad investment. It all depends what you are looking for.

Bank CD's are insured up to $100,000 by the FDIC. Probably the next step up would be short term treasuries or a money market mutual funds.

I guess the question you need to ask yourself is what do you want out of this investment.

 

[SSI]

CD's will get alot better over the next few months... not a bad idea to keep a little there....

 

[UoweDucks]

Agency notes, bonds

Agency notes FNMA, FHLMC, FHLB etc.

You can find any maturity out there, not insured but backed by the full faith and redit of the US Gov.

You can usually beat CD's with these.

 

[Sportsrmylife]

CDs are safe but the investment after taxes is terrible. You want safety try AAA rated MBIA insured bonds. If you can find tax free then that is even better. I read somewhere that these bonds have gone bad less than 1% of the time they are issued.

Safest thing to CDs with double the return.

 

[moethepuppy]

CDs are safe but the investment after taxes is terrible. You want safety try AAA rated MBIA insured bonds. If you can find tax free then that is even better. I read somewhere that these bonds have gone bad less than 1% of the time they are issued.

Safest thing to CDs with double the return.

Tax free bonds generally work best if you are in a higher tax bracket.

Just a question for you, since 12 month CD's can be found at an APY of over 5 percent these days are you saying these bonds are yielding over 10%.....

 

[UoweDucks]

CDs are safe but the investment after taxes is terrible. You want safety try AAA rated MBIA insured bonds. If you can find tax free then that is even better. I read somewhere that these bonds have gone bad less than 1% of the time they are issued.

Safest thing to CDs with double the return.

You can't claim that...
Rolling 7 day muni notes are 3.07% tax free. That is a 4.7% at the 35% bracket. Not quite a double. And I can get 4.7 in a taxable product for the same timeframe.


You have to look at the tax equivalency rate. Don't get me wrong, muni's are great just not right for anyone not in the upper brackets...

 

[Sportsrmylife]

You guys are absolutely right about the tax bracket requirement. I love searching for tax free bonds and forgot about that idea. I noticed that CDs are at 5.15% now on short term deals.

 

[gbogo]

banks large and small - smaller ones will work with you and offer you good rates - depends on bank rating as to what they offer

for example i invest with chase they offer me 4 % - i go to defence force credit union they offer 5.25

you can also buy instruments such as floating rate notes where the interest rate is set every three months - which is good if rates stay same or rise so u get the advantage of that

then you move down to corporate area where you have to assess your risk


bottom line higher returns involve less of a guarantee for your money and the more money you have the more bargaining power u have