Given that APYs on CDs have plummeted during the COVID-19 pandemic, many Americans are considering alternative ways to save. Here are a few of the most popular options:
High-yield savings accounts. Many high-yield savings accounts offer better APYs than CDs offer, and they don’t have any required terms or early-withdrawal penalties.
Dividend stocks. By buying stocks that pay dividends, you can receive a regular income stream from your investments on top of whatever value your stocks gain.
Exchange-traded funds (ETFs). ETFs are bundles of investments you can buy and sell like stocks. The best ETFs are relatively cheap and typically have lower fees than mutual funds, and they provide better returns than CDs offer.
Corporate, municipal and government bonds. Bonds are similar to CDs in that they involve little risk and modest returns. It’s generally better to buy bonds when CD rates are low, like they are now.
Peer-to-peer (P2P) lending. If you’ve got money to lend, a peer-to-peer lending platform lets you earn annual returns that typically range from 4.5% to 8%. However, P2P loans are often uninsured, so there’s a higher level of risk than there is with CDs.