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Thanks. The best rate I can find for a one yr CD is 3.3% APY, offered by ING Direct. A 4% one-yr return from a CD would definitely be better than the muni bonds, because of the NAV risk you mention for the bond option. But, do you know if any bank is actually offering this rate now?

I agree that until the time the interest rate starts going up, there is a risk in investing in bond funds, particularly for the intermediate and the long-term bonds. If one has to wait for 12 to 18 months before taking the plunge, keeping the money in a 12 to 18 month CD is perhaps the best option; but the rate has to be good.


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