Certificates of Deposit, or CDs, are safe, but the returns often fall short of exciting. If you’re aiming for better earnings without diving into high-risk territory, there are smarter options out there. Here are ten alternatives that could boost your savings potential right now.
High-Yield Savings Accounts
If you want an easy upgrade from a CD, high-yield savings accounts offer better interest rates while keeping your money safe and accessible. Many online banks offer a variety of options and are insured by the FDIC up to $250,000, making them a reliable and low-risk choice.
Treasury Inflation-Protected Securities (TIPS)
Rising prices slowly reduce your money’s value, but Treasury Inflation-Protected Securities adjust their principal based on inflation rates. Issued by the U.S. government, TIPS helps protect your purchasing power by increasing with inflation, so your investment keeps pace with rising prices.
Corporate Bonds
Looking for higher returns? Corporate bonds could be worth a look. These are loans to companies that pay interest over time. Since risk depends on the issuing company’s financial strength, yields typically surpass those of government bonds or CDs.
Savings Bonds (Series I Bonds)
Series I Bonds combine a fixed interest rate with an inflation adjustment set twice a year by the U.S. Treasury. The bonds are a solid choice if you want safe growth that outpaces inflation. You can buy them directly online with relatively low minimum investments.
Fixed Annuities
If steady income matters to you, fixed annuities might fit the bill. They are insurance contracts that guarantee a fixed interest rate for a set period. While they lack liquidity and may include withdrawal penalties, they provide predictable earnings and peace of mind for investors focused on steady returns.
Floating Rate Notes
Rising interest rates don’t have to be a bad thing. Floating-rate notes adjust their payouts as rates climb, giving you a hedge against inflation and changing markets. Most are issued by corporations or governments and have short maturities for added flexibility.
Convertible Bonds
Convertible bonds offer a unique blend of stability and upside potential. You earn regular interest like with traditional bonds, but you also get the option to convert them into company stock later. That flexibility makes them appealing during strong market cycles.
Baby Bonds (Small Denomination Corporate Bonds)
Not everyone can invest thousands at once, which is where baby bonds come in. These smaller-sized corporate bonds often start at $25, which makes them accessible to everyday investors. They still pay regular interest and are typically issued by well-known companies.
Preferred Stocks
Investors seeking higher income might consider preferred stocks. They pay fixed dividends that take priority over common stock payouts, making them a favorite for steady cash flow. Although technically equity, they behave more like bonds in many income-focused portfolios.
Treasury Bills (T-Bills)
Treasury Bills are short-term government securities sold at a discount and mature within a year. Because they pay face value at maturity, they offer guaranteed returns with minimal risk. Many investors use T-Bills as a secure place to hold cash temporarily.
