DEFINITION of 'Index-Linked Certificate Of Deposit'

A certificate of deposit (CD) with a return based on a specific index. These CDs are purchased for a fixed price. There is a chance for a high return, depending on the outcome of the index, and there is no risk of a loss as the CD is FDIC insured.

BREAKING DOWN 'Index-Linked Certificate Of Deposit'

While these CDs offer a potentially higher return than many other variations, they are not the safest investment. Even though the initial investment will never be lost, there may be no return on the index. If you are looking for guaranteed future income, a traditional CD may be a better choice for you.

RELATED TERMS
  1. Uninsured Certificate Of Deposit

    A certificate of deposit (CD) which is not insured against losses. ...
  2. Bull CD

    A certificate of deposit whose interest rate fluctuates in direct ...
  3. Bear CD

    A certificate of deposit whose interest rate fluctuates in inverse ...
  4. Promotional CD rate (Bonus CD rate)

    A limited-time offer of a higher rate of return on a certificate ...
  5. Callable Certificate Of Deposit

    An FDIC insured certificate of deposit (CD) that contains a call ...
  6. Variable-Rate Certificate Of Deposit

    A certificate of deposit (CD) with a variable interest rate. ...
Related Articles
  1. Investing

    Are CDs Good Protection For The Bear Market?

    Certificates of deposit promise stable income in any market, but do they deliver?
  2. Managing Wealth

    How To Create A Laddered CD Portfolio

    Laddered certificates of deposit offer safe capital and predictable cash flow, while bringing simplicity to your portfolio.
  3. Investing

    How To Earn The Most From CDs When Interest Rates Are Low

    Certificates of deposit might not seem like a good place to keep your money when interest rates are low, but they do offer security and stability. And with laddering and studying promotional ...
  4. Investing

    Long-Term Investing With Equity Index CDs

    Equity Index CDs are perfect for investors who don't mind hanging in for the long term.
  5. Investing

    Certificates Of Deposit

    Safety is a hallmark of the traditional certificate of deposit (CD) sold by a bank or credit union.
  6. Investing

    Money Market vs. CDs: Which Is the Better Investment?

    Find out which short-term savings vehicle, a money market account or a certificate of deposit, is a better investment for your needs.
RELATED FAQS
  1. What is considered a good interest rate for a certificate of deposit (CD)?

    Explore the various options available with certificates of deposit and discover how to find the most lucrative rates for ... Read Answer >>
  2. Do certificates of deposit help build credit?

    Learn about certificates of deposit, including if these securities are a useful tool to help build your credit score. Read Answer >>
Hot Definitions
  1. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  2. Portable Alpha

    A strategy in which portfolio managers separate alpha from beta by investing in securities that differ from the market index ...
  3. Run Rate

    1. How the financial performance of a company would look if you were to extrapolate current results out over a certain period ...
  4. Hard Fork

    A hard fork (or sometimes hardfork) is a radical change to the protocol that makes previously invalid blocks/transactions ...
  5. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  6. Ethereum

    Ethereum is a decentralized software platform that enables SmartContracts and Distributed Applications (ĐApps) to be built ...
Trading Center