For this portion of my retirement portfolio, I don't want to take on any risk. For risk-free investments, however, I thought that some probably perform better at particular times and others at other times and that was a reason to diversify. (And CDs seem now to have low interest rates.) It depends what you mean by "take no risk".Your total return is the stated interest rate MINUS inflation.The major problem with CDs is interest-rate risk. You won't lose principal as long as you stay under the FDIC limit, currently $250K but will drop to $100K in the near future.In return for that guarantee, the rates are low and you are locked in for several years. Penfed is paying 2.25% for 3 years and 3.00% for 5 years.If we have 1% inflation for the next 5 years, then your real return is only 2%.If you are willing to take on a little bit of capital risk, you could invest in a diversified set of preferred stocks, or an ETF that invests in them. Investment-grade Preferreds have an average current yield in the 6% to 9% range. "Ya pays your money and ya takes your choice."I did a little bit of both. I have some of my retirement money in CDs and some of it (much more) in a bunch of preferreds. And I'm retired, so no more paychecks to make up losses.
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