3.2%, 10-year CD

[brewer12345]

Not entirely correct. You can't liquidate I-bonds at all for the first year (and then it is a 3 months penalty for the first 5).

In addition to that, you can't buy I-bonds in an IRA, like I am planning to do with TIPS.

Of course, "safety" is nice, but 0.7% / year is a decent bonus. But what you are calling "safety" here applies only to long periods of deflation and we have not had those in a long time.

I don't find real interest rates below 1% for 10 years too comforting. YMMV.

 

[haha]

Here is a little financial maneuver that worked for me back in 2006. I was over the age of 59.5 (this is a key factor). Interest rates were going up very quickly reaching 6.25% on 7 year CD's. I had a group of Traditional and ROTH IRA CD's paying considerably below this rate. I called the Credit Union custodian of the CD's and said can I redeem ALL of my T & R CD's penalty free since I am over 59.5 years of age? They said yes you can but you will have to pay Federal & any applicable State Taxes unless you put the respective redeemed amounts back in to the appropriate T or R IRA within 60 days (which I already was aware of). I said well I want to redeem it ALL but reopen new CD's in the appropriate amounts now too. I did that and received the higher rates for 7 years without any tax or penalty impact.

Very clever; thanks for posting.

 

[dvalley]

I would've thought that in a rising interest-rate market buying a long term CD is probably not a good idea? I have looked at I-bonds before and figured they would be a good buy once the interest rates are high?

Looks like 3% in a long-term CD is considered pretty good these days huh? I guess (long) gone are the days when ING/HSBC/EmigrantDirect etc used to offer 3-4% in their savings accounts!

 

[hsv_climber]

10-year TIPS are currently 0.5%.
I guess I would not be buying them tomorrow after all.

After today's FED decision, CDs might be a better choice.