A side-by-side comparison of eight low-risk income assets — US Treasuries, TIPS, high-yield savings, CDs, money market funds, short-duration bond ETFs, dividend ETFs, and gold — followed by a defensive portfolio allocation for an investor prioritizing capital preservation.
As of: July 22–23, 2026CPI YoY: +3.5%10Y UST: 4.67%Series I Bond composite: 4.26%
Cash-equivalent yields (HYSA, money market, 1-year CD) sit in the 3.7–4.3% band — comfortably above the 3.5% CPI print, meaning a properly parked cash reserve actually preserves real purchasing power today. Treasuries extend that runway with a positively sloped curve topping out at 5.15% on the 30-year. The two assets that don't fit a conservative portfolio are dividend ETFs (full equity drawdown risk) and gold (zero yield, capital-gain-driven), so they earn only small satellite weights if used at all.
1. Market Backdrop
Headline CPI (June 2026)
+3.5%
First pullback in the year-over-year rate since the prior cycle. Gasoline led the -0.4% monthly decline. BLS
Real return floor; principal adjusts with CPI. 5Y breakeven inflation ≈ 2.39%. tipswatch.com
2. The Eight Asset Classes at a Glance
All yields quoted as of July 22–23, 2026. Risk score is a 1–10 qualitative scale where 1 = virtually risk-free (FDIC-insured / US Treasury direct obligation) and 10 = full equity-style drawdown.
Backed by allocated bullion (ETFs) / physical metal
Intraday (ETF) / variable (physical)
3. Current Yield Comparison
Yields above the dashed 3.5% CPI line beat inflation in nominal terms. TIPS yields shown are real; nominal TIPS return = real yield + CPI accrual.
4. Risk Tier Breakdown
Tier 1 — True Cash
Risk score 1: zero credit, zero mark-to-market risk over the holding period
Instrument
Yield
Why it earns Tier 1
Caveats
1-Year T-Bill
4.08%
Direct US Treasury obligation, zero default risk; held to maturity you see exactly 4.08%.
If you sell early, the price can drift; not a concern at 1Y.
FDIC HYSA (top)
4.05–4.26%
FDIC insurance up to $250K per depositor/bank; floating rate so moves with Fed cuts.
Spread between top and average banks is ~150 bps — shop around.
FDIC CDs (1Y top)
4.10–4.30%
FDIC insured, fixed rate locks in yield — beats the 1Y T-Bill.
Early withdrawal forfeits ~3–6 months of interest; ladder to retain optionality.
T-Bills in MMF (SGOV, BIL)
3.68–4.10%
Hold short T-Bills; yield floats daily; institutional-quality.
Not FDIC insured — government-only MMFs can "break the buck" only in a Treasury default, which is treated as effectively zero.
Tier 2 — Investment-Grade Income
Risk score 2: still effectively risk-free but with rate-sensitivity
Instrument
Yield
Why it earns Tier 2
Caveats
Treasury Notes/Bonds (2–10Y)
4.31–4.67%
Higher yield than cash, same credit. Positive real yield at the 10Y.
Mark-to-market loss if rates rise or you sell before maturity; 10Y duration ≈ 8.5 years.
TIPS (5–10Y)
1.98–2.35% real + CPI
Real-return protection — principal scales with CPI. Best inflation hedge in this group.
Deflation would shrink principal back; breakeven inflation ≈ 2.4%.
Short-Duration Bond ETFs (SHV, SHY, BSV)
3.50–3.95%
Diversified Treasury exposure with intraday liquidity; laddered maturities.
NAV moves with rates; <3-year duration so drawdown risk is modest.
Series I Savings Bonds
4.26% composite
Direct Treasury; rate resets every 6 months; never below 0%; tax-deferred.
$10K/yr/SSN purchase cap; 1-year interest penalty if cashed in year 1.
Tier 3 — Outside the Conservative Core
Risk score 5+: yield doesn't compensate for the capital risk a conservative saver accepts
Instrument
Yield
Why it earns Tier 3
Caveats
Dividend ETFs (SCHD / VYM)
3.4% / 2.8%
Yield comparable to T-Bills, but you also own a stock portfolio that can fall 30–40%.
Equity drawdown risk; dividend can be cut; not a substitute for bonds in a conservative book.
Covered-Call ETFs (JEPI)
7.2%
High headline yield via option premiums and ELN income.
Equity beta remains; yield is partly return-of-capital in flat markets; tax treatment is unfavorable in taxable accounts.
Gold (GLD / IAU / physical)
0% yield
No income; return is pure price appreciation — strong YTD but driven by macro, not fundamentals.
Volatile; historically pulls back 15–20% in risk-on regimes; storage/insurance costs on physical.
5. Risk Profile Discussion
5.1 Reinvestment risk vs. capital risk
The defining trade-off for a conservative saver in mid-2026 is between locking in today's 4%+ rates (CDs, long Treasuries) and keeping optionality (HYSA, T-Bills, MMFs) to benefit from the next Fed easing cycle. Markets are pricing roughly two 25-bp cuts by year-end; if that path holds, a 5-year CD at 4.30% will look like a missed opportunity by mid-2027.
5.2 Inflation risk
At +3.5% CPI, every cash-equivalent below that threshold is a real loss of purchasing power. TIPS solve this directly (real yield is contractual); I-Bonds solve it indirectly (composite rate formula, no floor under the fixed component but the inflation adjustment is locked in); everything else relies on nominal yields staying above CPI.
5.3 Credit risk
Effectively zero across this group. FDIC insurance covers HYSA and CDs; Treasuries and TIPS are direct obligations of the US government; Treasury MMFs and short Treasury bond ETFs hold only government or government-agency debt. Dividend ETFs and gold carry credit/issuer risk but that's not the binding concern — the binding concern is market risk.
5.4 Liquidity risk
CDs lock you in; T-Bills, HYSA, MMFs, ETFs, and gold are all liquid at most on a T+1 basis. The most illiquid corner is physical gold, where selling requires a dealer or pawn transaction.
Bottom line: For an investor whose primary goal is stable, low-risk returns, the yield is not the limiting factor — risk management is. The right answer is a laddered mix of Tier 1 and Tier 2 instruments that collectively beats CPI, locks in some duration, and keeps a usable cash reserve.
6. Recommended Conservative Allocation
A defensible "sleep-well-at-night" portfolio for an investor prioritizing capital preservation over growth, sized for a $100,000 starting balance:
25% Cash (T-Bills + Treasury MMF)
20% Online CD ladder (6m / 1y / 2y)
20% Treasury Notes (2–5y)
15% TIPS (5–10y)
10% Series I Bonds (annual purchases)
5% Short-Duration Bond ETF (BSV)
5% Gold (GLD/IAU)
Holding
Weight
Yield Today
Role in Portfolio
T-Bills + Treasury MMF (SGOV)
25%
4.00%
Liquid emergency reserve — 6 months of expenses, instantly accessible
Online CD ladder (6m / 1y / 2y)
20%
4.20%
Locks in a portion of today's high short rates while keeping a ladder for reinvestment
Inflation hedge — pays a contractual real yield plus CPI accrual
Series I Savings Bonds
10%
4.26%
Tax-deferred inflation-linked return; respect the $10K/yr/SSN cap
Short-Duration Bond ETF (BSV)
5%
3.95%
Operating cash for tax-efficient rebalancing, intraday liquidity
Gold (GLD or IAU)
5%
0% (capital appreciation)
Tail-risk hedge — small satellite only; sized for insurance, not return
Blended expected nominal yield
100%
~3.9%
After inflation: ~+0.4% real. Beats cash in any account.
6.1 Why these specific weights?
25% in pure cash is the textbook emergency-fund floor; with HYSA at ~4.2% APY there's no longer a yield penalty for holding cash.
20% in CDs locks in the front of the curve (where yields are best) while a 6m/1y/2y ladder preserves refinancing optionality if the Fed cuts.
20% in 2–5y Treasuries is the duration sweet spot: enough yield pickup over cash, but a 5-year note has only ~4 years of duration — survivable if you hold to maturity.
15% in TIPS is the explicit inflation hedge. At a 1.98–2.35% real yield, TIPS are paying you over CPI to take inflation risk — the cheapest hedge available.
10% in I-Bonds exploits the $10K/yr purchase cap to layer in tax-deferred inflation-linked income.
5% in a short-duration bond ETF covers the operating-cash role with checkbook-like access.
5% in gold is insurance against credit-event / monetary-debasement tail risk. More than 5–10% is speculation, not conservatism.
Dividend ETFs are intentionally excluded. At a 3.4% yield (SCHD) you give up Treasury credit quality and accept a 30%+ drawdown risk in a downturn — for the same yield as a 1-year T-Bill. They belong in a balanced or growth portfolio, not a conservative one. If equity exposure is desired for diversification, cap it at 5–10% via a total-market low-volatility fund.
7. Implementation Checklist
Open the right accounts. TreasuryDirect.gov for Treasuries, TIPS, and I-Bonds (purchase limits apply). One or two top online banks for HYSA + CDs (so FDIC coverage exceeds $250K).
Buy the cash sleeve first. Fund 6 months of expenses into a top-Yield HYSA before touching anything else.
Ladder the CDs. Stagger 6m / 1y / 2y CDs at three reputable banks — never more than $250K at any single institution.
Buy Treasuries on TreasuryDirect or via a broker. For tax-deferred accounts use the broker; for taxable, TreasuryDirect avoids the state-tax bite on the income.
Respect the I-Bond annual cap. $10,000/yr per Social Security Number plus $5,000/yr in tax-refund purchases. Spread purchases across the year if you want to avoid a single rate reset.
Buy TIPS in a tax-deferred account if possible. The CPI accrual is taxed annually as phantom income.
Buy gold via GLD or IAU. Physical is fine for sub-5% of the portfolio but adds storage friction; ETFs settle like any stock.
Rebalance once a year (or when an asset drifts more than 5 percentage points from its target weight).
All yields are as of July 22–23, 2026 and will change daily. The blended portfolio yield (~3.9%) is a snapshot, not a guarantee.
Risk scores are qualitative. The conservative allocation is designed for an investor with a multi-year horizon and tolerance for occasional 3–5% mark-to-market drawdowns on the Treasury sleeve.
This is independent research, not investment advice. Consult a fiduciary advisor before deploying capital.
TIPS yields shown are real (TIPS yields on the Treasury curve net of expected CPI). Total nominal return ≈ real yield + CPI accrual over the holding period.
Money market fund yields are 7-day SEC yields, which fluctuate daily.