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| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
|---|
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S&P National Bond Index
|
3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
|
0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| More |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
|
848.03 |
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S&P U.S. Preferred Stock Index (CAD)
|
636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
|
1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
|---|
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Choosing Between Certificates of Deposit and Treasury Bonds |
Visual Economics - July 6, 2010
Some investors grapple with investing in certificates of deposit or Treasury bonds. The logical choice seems to be certificates of deposit since these investments typically get higher yields and the investor pays lower fees. While earning a higher interest rate is certainly important, financial experts say higher yields should not be the deciding factor but rather one of the several factors you should consider when investing your money.
Treasury Bonds
When thinking about Treasury bonds, expensive is typically a thought that comes to mind. This is not necessarily true because Treasuries can be purchased online or by phone at a reduced rate – and without paying a fee. This eliminates the other considerations and only requires you to focus on the yield the Treasury is paying. Currently, most certificates of deposit are earning higher yields than U.S. Treasuries, but Treasuries have benefits that go above and beyond yields – namely, tax advantages. For one, states do not tax any income from U.S. Treasuries, so if you’re in a high tax bracket or live in a state with high taxes, Treasuries can help you get a break on your taxes. Treasuries are also more liquid than certificates of deposit because it is easier to sell a Treasury before it matures than it is to do the same with certificates of deposit.
Certificates of Deposit
While certificates of deposit come along with some benefits of their own, certificates of deposit also have some disadvantages. FDIC insurance coverage for certificates of deposit has its limitations. Certificates of deposit also have different rates at different banks, so make sure you have direct access to the certificates of deposit that are paying on the higher end of the interest rate spectrum. States also do not require you to pay taxes on the interest you earn on certificates of deposit, but selling certificates of deposit before its maturity date can be much harder than Treasuries. In addition, cashing in certificates of deposit early also comes with penalty fees, which can quickly add up – sometimes eating into the principal balance of the investment.
When you are choosing between certificates of deposit and Treasuries, the first consideration is your time frame for investing your money. If it is extra money or money you won’t need during the term of the certificate of deposit, then fine. If you think that for any reason you may need to access the invested funds, then take a closer look at Treasuries.
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| Stuff to look at |
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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