May 2008
More interest
If interest is your main consideration, there's a strategy that's a bit riskier and harder to execute but could provide a
greater return. It makes the most sense if you are saving up for something you plan to buy or do in two or three years, because
it may be volatile in the short term.
What you do is make an equal investment in no-load, short-term bond funds and bank-loan funds (also known as floating rate funds). Both are sold by mutual-fund companies and brokers.
When our Money Lab tested this interest strategy, it found that a 50-50 split between the two would have beaten the return of the average money fund in 13 of the last 15 years. The mix also beat the average one-year CD in 12 of the last 15 years. Average returns were 5.19 percent over the past 10 years—a figure that looks pretty attractive now.
What you do is make an equal investment in no-load, short-term bond funds and bank-loan funds (also known as floating rate funds). Both are sold by mutual-fund companies and brokers.
When our Money Lab tested this interest strategy, it found that a 50-50 split between the two would have beaten the return of the average money fund in 13 of the last 15 years. The mix also beat the average one-year CD in 12 of the last 15 years. Average returns were 5.19 percent over the past 10 years—a figure that looks pretty attractive now.
