Safety and income from CDs
Do you consider Treasury bills of $10,000 for six months' duration as good as anything else for safety and interest income, together with a 30-month certificate of deposit from an SOL yielding 12 percent? What should I do with a CD maturing in early fall? It is now drawing only 7 1/2 percent interest. M. B.
You are experiencing the problem with tying your money up in CDs for a fixed period, as the CD maturing later in 1981 now drawing 7 1/2 percent was considered a fair investment earlier. Times and cycles of inflation and interest are changing so rapidly that I suggest not tying your money up for longer than six months at a fixed return. The six-month T-bills you note are secure and pay reasonably well, but may be best only for those investors who demand absolute safety. Other investment alternatives, such as money-market mutual funds and income stocks, offer higher returns, but they are not direct obligations of the United States Treasury, as are the T-bills. As for the CD maturing in early fall, it is too early to advise the best place for it now.Ask for an opinion two or three weeks before it matures.