Bonds offer risk-free returns of over 5% for the first time in two decades. Here’s how capitalize on the easy money without tying up your cash for years at a time.

• Short-term interest rates are the highest they’ve been since the early 2000s.
• With rates likely near a peak, now is a good time to invest in Treasurys, says a financial advisor.
• A strategy that allows for flexibility and hedged risk is bond laddering.

Thanks to one of the most aggressive Federal Reserve tightening cycles in history, investors can now cash in on some meaningful returns in government bonds. 

That’s especially the case for short-term Treasurys with durations of one year or less, which tend to track closely with the fed funds rate and therefore now offer risk-free annualized returns of more than five percent. Government bonds are generally considered risk-free as the US government has never defaulted on a debt payment, though concerns over the riskiness of longer-duration bonds have grown in recent weeks following the debt-ceiling standoff in Congress earlier this year.