Short-Maturity Treasury and Government Debt Mutual and Exchange-Traded Funds
For those looking to own short government debt, we found these top exchange-traded funds, which may or may not have the ability for investors to reinvest dividends.
- SPDR Portfolio Short-Term Treasury ETF
- Vanguard Short-Term Treasury ETF
- Schwab Short-Term US Treasury ETF
- iShares 1-3 Year Treasury Bond ETF
- iShares Agency Bond ETF
Top investment companies like Vanguard and Fidelity also have highly rated mutual funds that trade on a closing price basis, which for some investors make more sense as the volatility may be lower as hedge funds and fast money investors tend to trade the ETFs more than the old-school open-end mutual funds. Plus shareholders almost always can reinvest dividends and any capital gains to buy more shares rather than take the income.
- Vanguard Short-Term Federal Fund (VSGBX)
- Fidelity Spartan Short-Term Trust Bond Index Fund (FSBIX)
- Baird Short-Term Bond (BSBIX)
- PGIM Short-Term Corporate Bond (PSTQX)
- Vanguard Short-Term Corporate Bond (VSTBX)
There is an alternative for investors looking for the highest interest rates but who are comfortable with, in some cases, longer holding periods. Typically certificates of deposit (CDs) may have a longer (but not always) maturity, but in most cases they can pay higher yields than money market savings. However, should you need to cash out before maturity, there is often a penalty and, in some cases, pretty severe ones at that. We found five short-maturity CDs that look like great ideas now. Again, this was from reliable sources, but these may have changed.
- Capital One: 4.15%. No minimum deposit, one year.
- Marcus from Goldman Sachs: 4.30%. $500 dollar minimum, one year.
- Bask Bank: 4.45%. $1,000 minimum, one year.
- CIT Bank: 4.55%. $1,000 minimum, 13 months.
- Synchrony Bank: 4.60%. No minimum, 14 months.
The reality now is that we remain in very difficult times, and another $1.7 trillion omnibus spending bill passed recently will push the total United States debt to nearly $33 trillion. That kind of profligate spending is what already has pushed inflation to the highest levels in 40 years, and a continuation of this kind of reckless spending likely will support higher inflation for years.
The good news is that worried investors can hunker down, move their money to the highest-yielding short-term investments in almost 20 years, and wait for an opening in the equity markets for a good entry point. For conservative investors looking for income and safety, now is the best of both worlds as short-maturity money pays very well.
Originally published at 24/7 Wall St.
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