CDs, or Certificates of Deposit, are investments made through banks. They can be short term, like 3 months or long term, up to 10 years. In most cases they are FDIC insured; and usually the rates and maturity dates are set when you buy them. Sounds pretty attractive next to the volatility of the stock market, so why isn’t everyone investing in them? Just a short year ago, rates were much lower and frankly it wasn’t worth giving up your liquidity for a very low rate… think less than 1%. Now that rates have gone up, you could get 3-5% depending on the terms you choose. Again, sounds good compared to losing money in stocks… but don’t forget to factor in inflation. With the most recent CPI increase at 8.2%, even at 5% investment is actually losing to inflation by 3.20%. Yet inflation will not remain this high forever, and you can finally earn a reasonable return on funds you want to keep low risk or short term. If you want to talk more about your situation and whether CDs are right for you, there is request for appointment link here on our website… just follow it and set up some time to chat with someone on our team.
Certificates of Deposit are FDIC insured and offer a fixed rate of return if held to maturity. Brokered CDs sold prior to maturity in the secondary market may result in loss of principal due to fluctuations in the interest rate or lack of liquidity. Brokered CDs are registered with the Depository Trust corp. (“DTC”). Brokered CDs with step-down and/or call provisions may be less favorable than traditional CDs without these features.