Little Risk and Little Rewards

This has not been the best time to earn some good interest on your money. If you are trying to keep your money in low interest investments or accounts, you really don’t stand much to gain. Most online savings accounts are running around the 1.5% APY mark, and the best you can expect from a shorter-term CD (ie 6 months to a year) is around the 2.0% range. You can stretch that interest rate out to around 3 – 3.5% if you’re willing to tie your money up for 5 years, but that is probably not a wise move at these low rates. I mean, really, interest rates have nowhere else to go but up at this point.

So, what options do you have right now?

Well, John Waggoner over at USA Today suggests looking into municipal bond funds if you’re willing to risk a little bit more. Currently, you can get around 3.5% yield, which isn’t really that great, but beggars can’t be choosers. As Waggoner puts it, “muni rates are higher than usual. A 10-year, high-grade muni now yields 3.54%. Someone in the 28% tax bracket would have to earn 4.92% in a taxable bond to get 3.55% after taxes.”

This might be a good option for someone looking for a slightly better yield that a CD or money market account though the risk of loss begins to creep into the picture.