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vba616

I'm surprised you compare it to a junk bond.

It sounds pretty much like a CD aka "Certificate of Deposit" which is a product sold by banks.

Is there an entire generation that doesn't know anyone who ever bought a CD from a bank?

These days they are a joke, but still shown on bank web pages.

Here is the list of rates from a regional bank near me:

   5 Year CD  0.10%
   4 Year CD  0.10%
   3 Year CD  0.10%
   2 Year CD  0.10%
   18 Month CD  0.10%
   12 Month CD  0.10%

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CDs are FDIC insured. If the bank goes under, you keep your funds (up to the insurance limit). Cryptocurrency accounts "staked" to a given exchange don't enjoy that benefit, as many people are now learning.

I'd also recommend anyone shop around for CD rates. Those are hardly representative of what you can get at, say, Ally. (2.75% APY on a 5 year)

It's a high risk junk bond with deceptive retail packaging to make it look like a safe bank certificate of deposit. The suckers are supposed to think it's a CD. As long as the underlying market goes up, it behaves like one. If the underlying market goes down...

It's a crappy bet, because the upside is limited while the downside can take you to 0.

You're still getting ripped off. Don't buy CDs from ally. You can buy treasury bonds directly from the US government for north of 3%.

See treasurydirect.gov.

It 'sounds like' any bond right, but compare the rates. One pays 20%, one pays 0.1%. One is 'junk', one would deserve as many As as Moody's has to offer.

(I don't think they actually rate them? Not from the US. But in some hand-wavy approximate way, they're as good as US gov bonds since they're similarly backed. (Actually why do you have both CDs & 'treasuries'? Monetary/fiscal separation sort of thing?))

Wow, that got a lot of downvotes.

Yes, 0.10% is dramatically lower than 20% or whatever. That's my point.

And yes, FDIC insurance is a thing. That's also my point.

And yes, younger people almost certainly haven't ever owned a CD themselves, but that wasn't my (somewhat rhetorical) question.

I think you may have gotten lost in your communications.

You responded that you were surprised that something high risk / high reward was compared to a junk bond, and then compared it to a CD. It's obviously more like a junk bond than a CD, for exactly the two reasons you now mention.

The answer is yes many young people have never lived as adults during a time when you saved money by putting it into instruments like CDs.

I asked one question, and seemingly you heard a different, dumber one.

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