Need fixed rate return. CDs?

[wageslave23]

My uncle is looking for something to put his 401k in that would guarantee a fixed 3-5% return for a couple of years.  I'm leaning towards CDs.  Any recommendations?

[ixtap]

Where are you getting above 3% on CDs?

[wageslave23]

I have no idea, thats why I'm asking for suggestions.  I've seen ads for 2.5 - 3% for 2+ yr cds, but never looked into them because I had no interest in investing in them at the time.  Any shorter term bonds that are almost as secure as government bonds that would return 3 or 4%?

[Financial.Velociraptor]

I would look at closed end funds (CEF) trading at a discount to NAV.  Go here: https://www.cefconnect.com/closed-end-funds-screener and set a filter for bonds and sort by discount to NAV.  You should be able to get a lot better than 3% and distributions paid monthly. 

Don't buy anything trading for a premium to NAV,  no matter how high the yield!

[grobinski]

Have you looked at Worthy bonds? I would be interested in what other mustachians think about Worthy or similar peer-lending platforms.

https://worthybonds.com

I've had a bit of $ in Worthy since close to inception, it's still there and has yeilded the stated  5%.

[Rob_bob]

Emerging market Sovereign Debt (PCY) 4.81% and Emerging Market Bond (EMB) 5.5%, these are Government bonds.

FWIW I've owned PCY since 2007 and it's still chugging along.

[Abe]

Vanguard Total International Bond Index Fund Admiral Shares (VTABX) offers higher-quality bonds (mostly in developed rather than developing countries) with comparable returns and a lower fee (0.11% vs 0.50% and 0.40%). Keep in mind that since all of these are low-yield funds, the expense ratios really become a significant factor over time. Overall, you will be hard pressed to find a bond fund that is low risk and has a 4-5% yield. 3% is doable, though.

             1-year  3-year      5-year
VTBAX: 5.15%   3.20%   4.12%
PCY:     4.46%   4.70%   5.13%
EMB:    3.58%   4.60%   4.53%

[wageslave23]

Thanks everyone!  I think the lower risk bonds might be a good option, at least for part of his money.