Choosing Between CDs, Bonds, and Money Markets

Zachary Mineur, CFA, CFP® was quoted in MarketWatch breaking down which savings vehicles make sense depending on an investors risk tolerance, time horizon, and liquidity needs:

“It all depends on what the alternative consideration is, risk tolerance of the investor, and whether or not there are short-term liquidity needs from that savings. For investors who value the highest level of safety and don’t have a need for the funds in the immediate term, then rates are still decent enough that CDs can be a good choice.

For folks with slightly higher risk tolerances, we can look to corporate bonds or bond funds that can pay a higher rate of interest and also potentially benefit from capital appreciation should rates come down. And for those with the potential for shorter-term liquidity needs, money markets or high yield savings accounts would be most appropriate, because CDs are meant to be held to maturity.”