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Savings-Bonds-Alert: Savings Bonds beat CD ladders

Thursday, October 07, 2004

Savings Bonds beat CD ladders

We occasionally see articles, like this one from, suggesting CD ladders as a strategy for increasing the yield on the low-risk portion of your portfolio. However, when you expect interest rates to rise, US Savings Bonds are a much better choice. Since Saving Bond rates adjust to the market (Series EE) or to the inflation rate (Series I) every six months, you'll come out way ahead. Yes, there's a three-month interest penalty if you redeem a Savings Bond before five years, but don't be afraid of that! You'll come out ahead even after paying the penalty! This article on United States Savings Bonds includes a detailed comparison of CDs, Money Market Accounts, and Savings Bonds. Also, here's a table of current interest rates that will give you further evidence that Savings Bonds beat CD ladders.


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