Trying to beat a 3% return on your savings these days is nearly impossible.
The highest online savings and money market rates are close to 1.20%. You can CD rates slightly over 3%, but you have to pick at least a 5-year maturity. Even the 10-year Treasury Bill dipped below a 3% yield this week. As for bond funds? Yikes, that’s a time bomb. No thanks.
Dividends yields are looking much better than they did a year ago. And there is value in some underpriced stocks. But with the economy still weak, do you want to put your money at risk just to earn that 3% or 4% dividend payout?
Savers are really getting hammered because right when that 3% return on their savings seems impossible, food and energy prices have shot up.
There is one sleeper investment that is earning well over 4% and is 100% backed by the federal government. Safe, secure and kicking out more income than the rest.
Savings bonds.
These aren’t your grandpa and grandma’s savings bonds, but the inflation-indexed variety.
With a nice little CPI adjustment made on May 1, Series I bonds are now earning 4.60% until next November. The downside is that you have to hold onto your savings bonds for five years to avoid paying a penalty when you trade them in. But if you are looking for a investment that tracks inflation for a portion of your portfolio, don’t forget about the Series I bond. They also have some tax advantages than can help you save money.
Here is more information on the Series I Savings Bond http://www.interest.com/cd-rates/news/i-bonds-set-to-soar-in-may/ from an article published on Interest.com
Clark Schultz Blog 