After five interest-rate cuts by the Federal Reserve in as many months, yields on cash are shrinking. A year ago, a two-year certificate...
After five interest-rate cuts by the Federal Reserve in as many months, yields on cash are shrinking. A year ago, a two-year certificate of deposit had an annual yield as high as 5.5 percent. Today, a two-year CD yields no more than 4 percent. For someone investing $100,000, that’s a difference of $1,500 a year in income.
Here are ways to boost returns on cash without undue risk:
• Money-market funds: Money-market mutual funds aren’t government insured, but they’re closely regulated. They now offer yields of up to 4 percent. Prime money funds can buy short-term corporate loans known as commercial paper, as well as government securities. There are also tax-free money funds that stick to municipal securities.
• CDs: Divide your cash into four equal parts, and buy a three-month, six-month, nine-month and 12-month CD. Every three months, buy another 12-month CD. Once rates start to rise, extend your ladder with five CDs ranging from 12 months to five years.
Most Read Business Stories
- The penthouse atop Smith Tower is on the rental market for the first time
- Downtowns will be back, but Seattle has choices to make
- Boutique cruise line Windstar will move its Seattle headquarters to Miami
- Zillow’s price estimates are now cash offers in homebuying push
- FCC approves $50 monthly high-speed internet subsidy for low-income households