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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RELATED FAQS
  1. What are the typical durations for a certificate of deposit?

    Investing in a certificate of deposit offers individuals the ability to earn interest on idle funds with less risk than stock ... Read Answer >>
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    Learn how interest earned on a certificate of deposit is taxed and how this may reduce the total return of an investment ... Read Answer >>
  3. 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 >>
  4. How safe an investment is a certificate of deposit?

    Discover certificates of deposit, their basic makeup and numerous variations, and understand why they are some of the safest ... Read Answer >>
  5. Can certificates of deposit (CDs) lose value?

    CDs are FDIC insured, so they do not lose face value, though broker-issued CD accounts do carry risks. Read Answer >>
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