DEFINITION of 'Indexed Certificate Of Deposit - Indexed CD'

A savings certificate entitling the bearer to receive an interest rate that is indexed to inflation. The indexed certificate of deposit (indexed CD) yields a rate of return that is linked to a stock market index, such as the S&P 500 or the NASDAQ 100.

BREAKING DOWN 'Indexed Certificate Of Deposit - Indexed CD'

Although indexed CDs have their principle guaranteed by the Federal Deposit Insurance Corporation (FDIC) like any other certificate of deposit (CD), the returns based on a market index and are not guaranteed in any way. Many look at these products as either a safer way into the stock market, or a riskier money market product.

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