Information about Investing in CDs

Apr 8
09:25

2010

Dustin Tenpor

Dustin Tenpor

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A CD (Certificate of Deposit) is available at very low interest rates at the present. The amount received will not even keep up with the low rates of inflation the government throws at us.

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A CD (Certificate of Deposit) is available at very low interest rates at the present. The amount received will not even keep up with the low rates of inflation the government throws at us. CD rates vary according to how long the money will be tied up. If an early withdrawal is made,Information about Investing in CDs Articles a month's worth of interest can be lost. Since not much interest is being delivered, this is a large loss. Sometimes more than one CD should be purchased in case of a situation where one must be redeemed.

A CD is a time deposit. If you are promising the bank to let them have the money, for example, for a year, then they assume it is not going to be taken out during that time span. The CD is guaranteed against loss by the FDIC (Federal Deposit Insurance Corporation), a government agency, created way back during the Great Depression of the 1930's.

The highest CD rates one could expect is about 2.5% and this is for having money tied up for 5 years, hardly conducive to getting rich and retiring early. CD rates for 6 months will return around 1%. If money has to be "parked" for a short time, a CD is a good financial instrument. For those with little money to risk, a CD can also be a good investment.

Check online and on the phone when searching for the best CD rates. Often they differ and do not necessarily offer a higher rate of interest by getting them online.