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Treasury bonds Vs high yield savings

 You have some additional cash and are looking for the best place to park to get more money from it? If you answered yes, couple of options that you might be considering could be

1. Treasury bonds

2. High yield savings with bank fixed deposits


This is especially in United States. 

First let’s look at the commonalities:

1. Both are absolutely safe and assured

2. The capital preservation is assured


Now, let’s look at when we should look for which one

1. If you could need this money anytime soon (within the next six months to a year or lesser), great option is to choose high yield savings. One option to consider is PayPal savings (which offer 4%+ APY these days. 

2. If you don’t need it immediately and consider ways to get the maximum amount in an assured way, you can consider 15 month fixed deposit in certain banks, which offer over 4.65% APY for 15 months.

3. If you think the inflation is going to remain high and want to save with the government, you can choose the treasury bonds as an option. 


Few things to note in case of treasury bonds

1. You can but only directly from them. I would prefer online

2. The rate would be updated every six months according to the inflation. It is going to go lower to around 3.5% starting May 1. So, if you are planning to park for a longer time, investing before May 1 would be a good choice

3. The rates have been historically much lower owing to a reduced inflation. I also think the inflation will go down and the returns on these bonds go lower. BTW, Dane would be the case with the bank fixed deposits too as all debt rates are related to a large extent.

4. If you want to take the money out before 5 years, you have to pay a penalty of last 3 months interest.

5. You can’t take the money out during the first year and this is a deal breaker got some people.


Hope this clarifies and helps you to make the decision on where to park excess cash that you are looking to grow with capital preservation.

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