Basically, what the title says. Is there any (legal) entity (in the US) that offers guaranteed returns with no risk past what bank accounts / brokerage firms offer from everything sitting in cash?

If not (and to the best of my knowledge, the answer is "not"), what is the closest to "guaranteed", AAA rated government and municipal bonds?

  • Not sure whether you'd call it an investment, but would an annuity qualify?
    – jamesqf
    Feb 23 '17 at 19:10
  • 2
    Of course an annuity is an investment. It's an investment in the education of the children of the salesperson peddling them. Feb 23 '17 at 19:37

US Treasuries are considered "risk free" (even though theoretically it's possible for the Treasury do default, it has never done it*) and that's about it. Everything else has some element of risk, although it may be miniscule. Even then, you have to have a fairly long-dated bill to get more than money market rates (e.g. right now, 3-month bills have a yield of 0.51%, 2-year notes have a yield of 1.19%) and likely will not overcome inflation.

*Technically the US Treasury defaulted once in 1979, but that was due (supposedly) on exigent circumstances and not on actual financial distress.

  • 1
    @VSO please note the part about bond return rates not keeping up with inflation. Also, if interest rates rise enough, T-bills will increase rates too, and we may get to a point where they DO outpace inflation.
    – Xalorous
    Feb 23 '17 at 17:03
  • @Xalorous Good call - I don't even remember how Treasuries work tbh, in terms of whether or not there is some floating component to adjust for CPI delta or something.
    – VSO
    Feb 23 '17 at 17:05
  • 1
    @VSO - there is not. Short-term notes pay no coupon and are sold at a discount. Notes and bonds pay a fixed coupon.
    – D Stanley
    Feb 23 '17 at 17:06
  • Treasury Inflation Indexed Securities, "The principal amount of the security is adjusted for inflation, but the inflation-adjusted principal will not be paid until maturity." treasurydirect.gov/instit/statreg/auctreg/auctreg_gsrlist.htm Feb 23 '17 at 19:43
  • There have been at least 6 defaults in US history. The Liberty Bond default of 1933 was $7 billion in 1933 dollars, or about $130 billion in today's money.
    – not-nick
    Feb 23 '17 at 22:24

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