what is the difference between "cd's" and "bond's" in terms of long toerm and short term?

Question

What percent interest is the average for a cd and bond?
are flipping these accounts every 2-8 years a good way to save and beat inflation?
what institutuion is the best for entry level bonds and cd's?

Answer 1

The long term solution to bonds is to buy them at a discount or face value, but never at a premium (never over 100 percent)--the percentage they are quoted at is the percentage of the thousand dollars that you will get back when the bond matures. This way you limit your losses whereever interest rates may go, assuming the company stays solvent until then. The declared interest rate, not the yield, is what will be paid steadily until maturity.

As for CDs, consider a "ladder"--put some in near-term periods like 30-90 days, some in mid-term periods, 6-9 months, and some in long-term, like 1-2 years (never more than 2 yrs). Then when the near-term ones mature, shop for the better rates but balance them over time if you can. This game of 'leap-frog', near-term money becomes long or mid-term, then the next that matures stretches out again into some balancing future maturity, will average-out the rates and keep you from suffering too much from rate fluctuations. It gets a little complicated, but we're talking about checking investments once or twice every few months, not daily.