CDs are insured by the FDIC but bonds have no such protection. It’s possible for the bond issuer to default, which would cause you to lose your investment. Except for some types of savings bonds, you’re free to sell bonds to other investors, even if the bond hasn’t yet matured.

Which option is best for your financial goals?

At Vanguard, you can only hold brokered CDs in a Vanguard Brokerage Account. Certificates of deposit (CDs) are available from banks or credit unions and work much like savings accounts but offer a slightly higher interest rate. In return, the holder agrees to let the issuing financial institution keep and use their money for a set period. That period can be as short as six months or as long as 10 years. The right mix of CDs, bonds, and bond funds depends on your financial goals, time horizon, vanguard cds and bonds and risk tolerance.

What’s the difference between money market funds and CDs?

Vanguard Brokerage Services (VBS) has provided availability to the alternative trading systems operated by Tradeweb Markets LLC (“Tradeweb”) and to other content provided by Tradeweb. Tradeweb provides access to certain municipal bond information from DPC DATA. Tradeweb and DPC DATA are third parties and are not affiliated with VBS. While VBS provides access to Tradeweb’s alternative trading systems, VBS has no control over actions taken by Tradeweb. There may be other material differences between products that must be considered prior to investing.

Maturity

Protect your initial investment with government insurance, subject to applicable limits. While the FDIC and Securities Investor Protection Corporation (SIPC) both offer protection for your money, they insure different types of accounts. Yields on CDs tend to be lower than those of other higher-risk investments.

3The Cash Plus bank sweep program annual percentage yield (APY) will vary and may change at any time. The U.S. government-backed FDIC insurance program helps bolster trust between banks and their customers, protecting cash in the event of a bank failure. It creates a sense of safety and stability for all savers, especially those who are more conservative with their money and have a low risk tolerance. When you open an account at a bank or savings institution that’s a member of the FDIC, then your deposits will be automatically insured up to the maximum coverage limit. Any funds above the limit are at risk of being lost in the event of a bank failure. To prevent this from happening, consider spreading your money across different ownership categories and account types, so your cash deposits are protected.

More Cash Options at Vanguard

As such, a CD is a great place to park some money you don’t need without fear that it will disappear. Check out key information you can use as you begin your DIY investing journey.

• If your bank isn’t able to return the money you’ve deposited, the FDIC will reimburse you for up to $250,000.
• Both stocks and bonds can be good investments, but they have different levels of risk and potential rewards.
• That means that money in different ownership categories, like a single account and joint account at the same FDIC-insured bank, are separately insured up to at least $250,000.
• Learn more about and view a list of Vanguard Brokerage’s brokered CDs.

• Bonds are securities that represent loans to companies or governments.
• FDIC coverage may be decreased based on Program Bank limits and whether you’ve opted out of any Program Banks and is subject to applicable FDIC coverage limits.
• High-yield savings accounts, certificates of deposit (CDs), and money market funds are 3 popular options for short-term savings, each of which offers unique benefits.
• With an expense ratio of 0.03%1, this ETF simplifies all-curve exposure, making it an efficient solution for investors seeking broad Treasury market coverage.

When it comes to managing your cash, having the right tools in your financial tool kit can make all the difference. High-yield savings accounts, certificates of deposit (CDs), and money market funds are 3 popular options for short-term savings, each of which offers unique benefits. As noted above, money market accounts are different from money market funds.

3Firms may have restrictions on the withdrawal of recently deposited funds. Consulting with a financial advisor can also provide personalized guidance. This holds the money you use to buy securities, as well as the proceeds whenever you sell. And because we don’t put up capital to maintain a bond inventory, we can pass our savings on to you. Our commissions, markups, and markdowns are among the lowest in the industry. Here’s a breakdown of the pros and cons of investing in each market.

Vanguard requires a $1,000 minimum deposit to purchase a brokered CD. Cash Plus bank sweep program balances are held at one or more Program Banks, earn a variable rate of interest, and are not securities covered by SIPC. They are not cash balances held by Vanguard Brokerage Services (VBS), a division of Vanguard Marketing Corporation (VMC); VMC is not a bank.

Bank CDs:

Bond funds, on the other hand, are a collection of many loans from different investors. The main difference is that individual bonds are specific loans, while bond funds are a mix of many loans. Bond funds offer more diversification because they spread your money across different loans, reducing risk. So, if you want more diversification, you might want to consider bond funds.