“Now that yields are coming down, short-term Treasuries and municipal bonds are becoming more attractive,” said Jonathan Shenkman, president of Shenkman Wealth Management in New York. “One-year Treasuries, in particular, have a yield of approximately 4.5%, which may continue to rise in the likely scenario of the Fed continuing to raise rates.”
Other alternatives include certificates of deposit and Treasury exchange-traded funds. Here is a guide to the pros and cons of those vehicles compared to I bonds.
Not For Everybody
One of the cardinal rules of investing is not to let the fear of missing out — or what economist John Maynard Keynes called “animal spirits” — guide your portfolio.
“No single investment is the right answer for absolutely everybody,” said Laura Mattia, chief executive of Sarasota, Florida-based Atlas Fiduciary Financial. Lately, she’s taken issue with a number of popular financial gurus who have claimed that “everyone” should have I bonds. “Not everybody should not have I bonds. Everybody should try to understand what they’re trying to achieve.”
Pepper of Northbrook Financial agrees.
“A word of advice for young investors or those with a longer term horizon: Don't give up on the stock market,” he said. “I Bonds are definitely ‘having a moment’ but they should not serve as a replacement for a long-term investor’s stock portfolio.”
This article was provided by Bloomberg News.