Sumap,Bonds are a pretty diverse group, looking at my brokers spread, agency and AA and A paper as a group are all competitive with CD's. Within those groups one might be able to find a bargain which would beat CD's. Treasuries may be advantagous to those who live in income tax states or municipalities, one needs to do the math to be sure. Some agency debt has local tax advantages as well which would may make them the superior choice. Municipal bonds are similarly tax advantaged so one needs to do the math for those also. The final argument for bonds is liquidity and this is also a case by case basis. To cash in a CD early some penalty must be paid. To sell a bond one will also have to pay the spread and a brokers comission depending on how the broker prices the bond(s) this may or may not be better. Both CD's and Bonds are best held to maturity by the small investor but circumstances change. You are correct that CDs are a very competive vehicle right now.jack
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