No. of Recommendations: 5
Nobody has yet mentioned the safest of the safe: U.S. Savings Bonds.

The I-Bond is adjusted for inflation. The EE bond yield is 90% of the 5-year Treasury yield, so the interest rate will rise, as prevailing rates rise. Because I think that interest rates will rise soon, I prefer an adjustable rate Savings Bond to a fixed CD ladder.

The interest of U.S. Savings Bonds is state-tax exempt, and federal-tax deferred until cashed out. If used for education, the tax is waived.

There is a 3-month interest penalty, if cashed out between 1 and 5 years of holding. Even with the interest penalty, they yield higher than 1-2.5 year CDs. Unlike CDs or bonds, it is up to the owner of the Savings Bond when to cash out the bond. Principal is always assured (unlike other bonds and unlike bond funds).

It is possible to invest $120,000 per year in U.S. Savings Bonds:
$30,000 in paper EE bonds
$30,000 in EE bonds, via Treasury Direct
$30,000 in paper I bonds
$30,000 in I bonds, via Treasury Direct


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