I believe I saw some stable bond funds out there paying 2-3% with minimal expense ratio. Wouldn't this be a better place to park your money vs the savings account? The money is just as liquid when you sell the bond fund, and you also qualify for long term capital gains when you hold it for more than one year.

Am I missing something?

are you asking about stable value funds, or bond funds that have low volatility (i.e. short duration focused)?

sailwind said:I believe I saw some stable bond funds out there paying 2-3% with minimal expense ratio. Wouldn't this be a better place to park your money vs the savings account? The money is just as liquid when you sell the bond fund, and you also qualify for long term capital gains when you hold it for more than one year.

Am I missing something?

Yes, the possibility that you might lose money. This is so rudimentary that I'd suggest you learn a little more before placing your assets at risk.

A lot of the extremely short horizon bond funds actually pay less than savings. SHV is the shortest duration bond fund I know of (US Treasuries with maturities less than 1 year out). Distributions come out to about 0.8%/yr. Citibank e-savings pays around 1.25%.