High yield investments provide an alternative to low-risk investing options such as bonds, CDs, money markets, savings accounts and treasuries. Though, both types of investments have a place in a well-balanced portfolio.
With a high-yield savings account, nearly all deposits come guaranteed as Federal Deposit Insurance Corporation (FDIC) insured bank accounts, providing up to $250,000 in coverage in the event of bank failure or insolvency.
CDs often have higher rates than savings accounts or money market accounts because they include a time component for locking up your money before you can have it returned to you (without paying an early withdrawal penalty).
The U.S. Treasury Department sells Treasury bonds, commonly known simply as “Treasuries,” to fund government spending needs. This can include purposes such as paying off the national debt, funding Social Security benefits for current retirees or paying military salaries during wartime.
These income-generating assets offer slightly better returns than Treasuries with only slightly more risk. Because the likelihood of the Federal government defaulting on their debt is low, they pay the lowest interest in the debt market.