Certificate of Deposit(CDs)- Finance & Business

Certificates of Deposits are an investing option for people who are looking for another facet to add to their portfolio. I personally think stocks are a better option for investors, as long as you invest in very secure and historically stable companies, but certificate of deposits are liked by many. The difference of a COD versus a stock investment is the COD is unable to decrease in value. You are guaranteed your funds back(in theory). CODs are essentially loans you make to banking entities, just like when you get a loan and pay the bank interest; when you loan to the bank, the banks pay you interest. Of course like everything in the financial world, interest rates vary greatly. With that said, some of the best rates are around 2-3%. CDs are more of a security measure versus a potential profit opportunity(like stocks). CDs are insured up to 250,000. If you were to use different banks you would be able to have each account insured for up to 250,000; therefore people who want to invest a million dollars will likely have at least 4 different CD accounts. If you have seen the Netflix show “The Ozarks” when the main character goes to the bank to withdraw all of his money to run, he got charged fees. This brings me to my next point, CDs are not able to be liquidated(withdraw money) until the term is up. Terms range from 6 months, 1 year, 2 years and so on. Financial analysts often debate about whether CDs are good investments or not due to inflation. See, if you invest 100,000 dollars hoping to get a return of 2,300 at a 2.3% rate, depending on how long of a contract you have inflation could devalue your earned interest rate. I’m sure you see where I’m going with this, inflation could put you in a position where you make nothing at all. Or it could not, it all depends on the economy, considering inflation when using CDs is just something to keep in mind. I guess with all else considered, it is at least more secure and insured at higher dollar amounts in comparison to your typical savings accounts. So although it may not earn you any money, it shouldn’t loose you any either. Any thoughts? Experiences? Share below. Follow and like if you enjoy these posting, I will continue posting financial information. Leave a comment if there is anything you want covered. Thanks

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