I-bonds can beat 5 year CDs currently. I just ordered a bunch. As of May 1, they're paying 4.66%, if I recall the exact number correctly. Rates change each May and November. There's a limit as to how much you can buy in a year; I think $30,000. You can't cash in for 1 year; after that, if you cash in before 5 years, you lose 3 months interest (decreasing your interest for that last year to about 3.5% at the current rate); you get full interest cashing in any time after 5 years. You don't pay tax on the interest until you cash in the bond (unlike the deal with TIPs). Gov't has a website where you can get full info, order online, even set up an electronic Treasury Direct Account and order electronic I and EE bonds. (You cannot yet convert paper bonds to electronic bonds, but they're looking into adding this feature). I think the website is www.savingsbonds.gov -- if I'm wrong, check a search engine, which is how I got there myself. The Treasury Direct account is set up through another website, probably www.TreasuryDirect.gov -- I think I got there via a link from the savings bond site.Other thoughts: Having thoroughly studied Gillette Edmunds' book published in 2000, "How to Retire Early and Live Well with Less Than a Million Dollars" (which, despite the generic title, is by far the best of many investing books I've read), I would do with Mom's money what I'm doing with my own: Put it into 3-5 non-correlated asset classes. The book tells you everything you need to know about this, and has certainly convinced me that it's the least risky strategy of all. I would consider the pension/SS $ as the equivalent of bonds, and divide the $100K plus any future reinvestments equally into other non-correlated asset classes, rebalancing every year or 2.My own choice is 20% each into: US non-REIT stocks; real estate; oil & gas; stocks of developed foreign countries; and emerging market foreign stocks. (The book discusses other potential asset class choices as well, eg: gold, bonds, etc.) My personal choice of vehicles for investing in these various asset classes is as follows:For US non-REIT stocks: Vanguard Total Market Index Fund (not sure if that's the exact name, but it's the index fund covering the entire US stock market); and two exchange traded funds: RSP (S&P 500 Equal Weight Index Fund, which is rebalanced quarterly and holds equal dollar amounts of each stock) and MDY (S&P MidCap SPDRs). For real estate: Individual REIT stocks (you can find a list of "Blue Chip REITs" on the TMF message board on Real Estate - Investing in REITS); and Vanguard's REIT Index Fund. The latter does go against Mr. Edmunds' advice to buy no more than about 5 individual REIT stocks, because more (such as an index fund) will give you too high a correlation with US small cap stocks, but I figure the high dividend yield of REITs makes a big difference between these 2 categories.For oil and gas: two exchange traded funds: IXC (Global Energy Index Fund -- top holdings are almost all big oil cos -- Exxon, BP, Total Fina Elf, Royal Dutch/Shell, Chevron, etc) and OIH (Oil Service HOLDRs; must buy in 100 share lots, current cost high $60s per share, invests in oil service cos as opposed to oil production cos); and one stock, KMP, Kinder Morgan Partners, large natural gas pipeline co. There's also the parent co. Kinder Morgan (KMI) which pays less in dividends but has more growth potential -- see recent TMF article about the co. I'm still researching other ways to invest in oil & gas, but these are my 3 so far.Stocks of developed foreign countries: several exchange traded funds: EFA (Europe, Asia, Far East, tracks MSCI EAFE Index; note holdings are heavy on UK and Japan stocks; also top single holding last check was BP, which overlaps the Oil & Gas category -- ie: know what your index funds actually hold!); EPP (Pacific excluding Japan -- heavy on Australia); EZU (European Monetary Union or EMU index -- stocks of European countries using the Euro -- so it excludes UK and, for that matter, BP). The latter 2 are to balance out the heavy weighting of UK and Japanese stocks in EFA. Another to consider is IEV (S&P Europe 350; the S&P's choice of 350 top European stocks, which do include UK). Emerging Market Stocks: One exchange traded fund - EEM - tracks index of emerging market stocks (just started trading in April 2003, up 20% already), and Vanguard's Emerging Markets Index Fund (charges a 1/2% purchase and redemption fee).
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