Analyzing The Best Retirement Plans And Investment Options: Cash Investments
  1. Analyzing The Best Retirement Plans And Investment Options: Introduction
  2. Analyzing The Best Retirement Plans And Investment Options: Annuities
  3. Analyzing The Best Retirement Plans And Investment Options: Bonds
  4. Analyzing The Best Retirement Plans And Investment Options: Cash Investments
  5. Analyzing The Best Retirement Plans And Investment Options: Direct Reinvestment Plans (DRIPS)
  6. Analyzing The Best Retirement Plans And Investment Options: 401(k)s And Company Plans
  7. Analyzing The Best Retirement Plans And Investment Options: Exchange Traded Funds (ETFs)
  8. Analyzing The Best Retirement Plans And Investment Options: Individual Retirement Accounts (IRAs)
  9. Analyzing The Best Retirement Plans And Investment Options: Mutual Funds
  10. Analyzing The Best Retirement Plans And Investment Options: Stocks
  11. Analyzing The Best Retirement Plans And Investment Options: Conclusion

Analyzing The Best Retirement Plans And Investment Options: Cash Investments

  • What they are: Low-risk, short-term obligations that provide returns in the form of interest payments.
  • Pros: Low- to no-risk; easily redeemable; often FDIC insured.
  • Cons: Withdrawal penalties may apply; low return.
  • How to invest: Directly through financial institutions; your broker; your local bank or credit union.

Cash investments are easily redeemable, low-risk places to park your cash.  Since the money is easy to get to, you can earn a small return while keeping cash available in case of emergencies. Cash investments include CDs, guaranteed investment contracts (GICs), money market deposit accounts, money market funds and savings accounts. Any earnings on these investments are inherently low due to their no-risk nature.
 
Certificates of Deposit (CDs)
A CD is a type of savings instrument issued by a bank, credit union or broker. They pay a specified rate of interest over a defined period of time, and repay your principal at maturity. If you cash in or redeem your CD before maturity, you may have to pay an early withdrawal penalty. CDs can be issued in any denomination, and maturities typically range from one month to five years or longer. They are FDIC-insured if they are issued by an FDIC-insured bank. If you buy a CD from your broker, the money should be put in a CD account at an FDIC-insured bank. If not, your CD will not be insured by the FDIC.
 
Guaranteed Investment Contracts (GICs)
GICs are insurance contracts that guarantee the owner a fixed or floating interest rate for a set period of time, plus the repayment of the principal. GICs essentially work like giant CDs but without FDIC insurance. Typically, GIC contracts run from one to seven years. These contracts are a popular investment options for 401(k) plans.
 
Money Market Deposit Accounts (MMDAs)
Money market deposit accounts are a type of savings account that offer a more competitive rate of interest in exchange for larger-than-normal deposits. MMDAs typically have restrictions that limit the number of transactions you can make each month and set a minimum balance in order to receive the more favorable interest rate. Funds in MMDAs are FDIC insured.
 
Money Market Funds
Money market funds are a type of mutual fund that deal in debt obligations. Unlike money market deposit accounts, money market funds are not federally insured. Money market funds may invest in:

  1. U.S. Treasury funds
  2. U.S. Government funds
  3. General purpose corporate funds
  4. Tax-free money market funds that invest in municipal bonds

Savings Accounts
Savings accounts are deposit accounts held at a bank or other financial institution, providing principal security and a modest interest rate. Although savings accounts pay lower interest rates than CDs, they typically offer better rates than checking accounts. There may be restrictions on the number of transactions that can be made each month.

Analyzing The Best Retirement Plans And Investment Options: Direct Reinvestment Plans (DRIPS)

  1. Analyzing The Best Retirement Plans And Investment Options: Introduction
  2. Analyzing The Best Retirement Plans And Investment Options: Annuities
  3. Analyzing The Best Retirement Plans And Investment Options: Bonds
  4. Analyzing The Best Retirement Plans And Investment Options: Cash Investments
  5. Analyzing The Best Retirement Plans And Investment Options: Direct Reinvestment Plans (DRIPS)
  6. Analyzing The Best Retirement Plans And Investment Options: 401(k)s And Company Plans
  7. Analyzing The Best Retirement Plans And Investment Options: Exchange Traded Funds (ETFs)
  8. Analyzing The Best Retirement Plans And Investment Options: Individual Retirement Accounts (IRAs)
  9. Analyzing The Best Retirement Plans And Investment Options: Mutual Funds
  10. Analyzing The Best Retirement Plans And Investment Options: Stocks
  11. Analyzing The Best Retirement Plans And Investment Options: Conclusion
RELATED TERMS
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. ...
  2. Guaranteed Investment (Interest) Certificate - GIC

    A deposit investment security sold by Canadian banks and trust ...
  3. Index-Linked Certificate Of Deposit

    A certificate of deposit (CD) with a return based on a specific ...
  4. Promotional CD rate (Bonus CD rate)

    A limited-time offer of a higher rate of return on a certificate ...
  5. FDIC Insured Account

    An account that meets the requirements to be covered or insured ...
  6. Uninsured Certificate Of Deposit

    A certificate of deposit (CD) which is not insured against losses. ...
RELATED FAQS
  1. Is a money market account the same as a money market fund?

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  2. Besides a savings account, where is the safest place to keep my money?

    Savings accounts are safe because investors' deposits are guaranteed by the Federal Deposit Insurance Corporation (FDIC) ... Read Answer >>
  3. 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 >>
  4. What determines the interest rate in my money market account?

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  5. What is considered a good interest rate for a certificate of deposit (CD)?

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  6. What are the typical durations for a certificate of deposit?

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