The 4 best savings rates for the financially bearish – What options do conservative savers have besides stuffing cash into the mattress?

Savings rates have been incredibly low for the past decade.  Many growing into this current economy must think that banks are simply expensive mattresses where you keep your money.  There are options out there for stashing your emergency fund or simply for keeping some of your savings money powder dry.  There are many options out there but it must seem incredibly confusing to people simply looking for the best yield in a very challenging market.  The stock market may be up but banks are still paying out close to zero percent on savings accounts.  Where can bearish savers place their money and actually sleep at night without worrying too deeply?  As we all know that with risk comes reward so do not expect big yields here but then again, you shouldn’t be chasing massive yields with your emergency funds in the first place.


1.  U.S. Treasury I-Bonds – One of the better options is through U.S. Treasury I-Bonds.  These are savings bonds that are indexed to inflation and will never pay less than zero.  The rate adjusted bi-annually and fluctuates with the CPI.  They also pay a fixed rate component but that has been zero since 2010.  The current rate is 1.53 percent.  The benefit of these is that you can purchase them through Treasury Direct and link them up to your traditional checking account.  You can purchase up to $10,000 a year per Social Security number.  In this low yield environment, these are not a bad deal.  If these are redeemed within the first five years of purchase, you will forfeit 3-months of interest.  Not a bad trade off for the rate.

2.  Treasury Inflation Protect Securities (TIPS) – These investments seek to invest in US government debt through inflation-indexed bonds.  Most have dollar-weighted average maturities between 7 to 20 years.  This is another good option for the bearish investor.  For example, compare the overall stock market versus a TIPS fund over the last 10 years:

VIPSX:                   33.85%

VTI:                        42.35%

For a very low volatility, this is another good place to stash some cash.

3.  Non-traditional banks like ING, Ally, Everbank – If you look at brick and mortar type big banks you will be lucky to get anything higher than zero percent on your savings account.  By the time you get a certain fee on something, your little interest will be wiped away into thin air.  Some of the more non-traditional banks like ING, Ally, and Everbank offer better rates because of smaller storefront operations.  Current rates are as follows:

Ally:                       0.84%

ING:                       0.80%

Everbank:            0.91%

4.  CDs – Certificate of Deposits act like a forced savings account.  You purchase a CD for a set timeframe and will get a guaranteed return over this period.  Many of the one year CD rates are yielding 1 percent so this isn’t a get rich quick spot either.  This is simply a place to store your money and earn a bit more than your regular savings account.  Some will benefit from CD laddering and have 1, 3, and 5 year maturities hitting at various times.

It isn’t hard to beat the market when the savings rates at most big banks is zero percent.  Throw in the added fees some will hit you with and you will experience negative growth rates.  I prefer things like I-Bonds and TIPS for emergency funds because in reality, with inflation, even the 1 percent rate is making you fall further behind.  The above are simply a sample of safe savings vehicles for those that are financially bearish.

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