Originally Posted by Rich_in_Tampa
Bankrate.com shows about 5.1% best rate this evening, as an example.
If you shop around, there are better rates. Check out www.penfed.org
There are also other alternatives, like OSM (stick that ticker into yahoo finance or similar). This is a bond issued by Sallie Mae that pays CPI + 2%. Could be less or more than 5.1%, but you avoid the risk that inflation eats away all your yield.
There are also I-bonds, which pay CPI plus something (1%?), wth no state tax on the interest and federal taxes deferred until you cash in the bond.
Or there are exchange-traded preferred stocks that pay attractive cooupons that are taxed as qualified dividends (15% federal tax). The ones issued by highly rated issuers have very little default risk, and you can even find some that are floating rate payers, so you don't take interest rate risk.
Or there are things like AHL's exchange-traded preferred. This thing pays 5% and change in yield, with the payouts taxed as qualified dividends. Att the end of 3 years, you get a new preferred stock worth par plus any appreciation in the issuer's equity over a set price. If the issuer's stock goes down over that time period, you don't take the hit.
As you can see, there are lots of flavors of bonds out there. Of the ones I described, some are riskier than others, but I do not regard as any of them as being as risky as a junk bond or an equity.