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Bonds and CDs Information

Is it better to sell my bonds and invest in the CDs?

I have been investing in I bonds for over 6 years. The rates are now really low compared to CDs. Is it better to sell the bonds and invest in the CDs?

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This is basically a question of relative returns on fixed income instruments. Which means, apples-to-apples, you will want to select the instrument that provides the highest return.

To assess what you should do, you will want to figure out if your bonds are trading at 'par' or at a discount. If you will lose principal by selling the bonds, you will want to factor that into the equation.

The other consideration is taxation. If your bonds are muni bonds or tax-exempt, then you will want to be sure to compare after tax returns.

However, since the Federal Reserve raised rates 17 straight times, it may be likely that CDs do offer a better rate of return than your original bonds.

I hope this information helps you Find. Learn & Save.

Best,

Bill

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    Oct, 2010
    Jackson
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