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Another alternative includes individual bonds, particularly investment-grade bonds with maturities ranging from four to five years that offer yields between 2.3% and 3%. Individual bonds require a bit of research and effort to select but can provide a notable improvement over low-yield cash accounts.
If the option of individual bonds seems daunting, investors might consider short-term bond funds, though caution is advised. For instance, popular options like PIMCO’s ETF (ticker: MINT) and Vanguard’s (ticker: VUBFX) provide attractive yields, yet they come with risks since their values fluctuate. One major benefit of bond funds is their liquidity compared to certificates of deposit (CDs), making them appealing for those who need faster access to their funds.