Allan Roth, founder of Wealth Logic LLC in Denver has helped in recent months several of his clients replace a part of their bond-fund investments with high-yielding five-year certificates of deposit. Mr. Roth says he likes the Ally Bank five-year CD, which has an annual percentage yield of 2.4% and a penalty of 60 days' interest for early withdrawal. An investor who holds this only for one year gets a 2% yield even after the penalty, says Mr. Roth. That's better than, say, the Vanguard Short-Term Bond Index fund, which is yielding just 1.2%. (Source: http://online.wsj.com/article/SB10001424052748703886904576031330950885752.html?mod=ITP_thejournalreport_0)
This is a great deal that you can find to park your cash. Small investors can hardly find a deal of greater than 2% yield for their short-term investment. Checking Ally Bank's website, I found that its 5-year CD offering and other types of CDs are not available for IRA account. So you can only stash cash in the taxable accounts at the bank and the yield may come down to 1.5% after the tax bite. Just be aware of that!
p.s. I know a lot of folks do not subscribe to paid edition of Wall Street Journal Online. Here is a little tip for you to read articles on Wall Street Journal online for free: just google the title of the WSJ.com article at google.com, and the article will show up in the search results. Click on it to get to the article on WSJ.com and read it for free, enjoy!
Caveat: You may only enjoy five free articles from WSJ.com per day. Now Google is allowing publishers to opt into a First Click Free program, which should actually be called the First Five Clicks Are Free. A news site now can limit the number of free clicks from Google News for any individual to five a day. Read this article to get more information on the First Click Free program from Google: http://techcrunch.com/2009/12/01/google-news-concession-first-clicks-free/
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