1. Certificates Of Deposit: Introduction
  2. Certificates Of Deposit: Safety And More!
  3. Certificates Of Deposit: The Basic Model
  4. Certificates Of Deposit: Bells And Whistles (Part I)
  5. Certificates Of Deposit: Bells And Whistles (Part 2)
  6. Certificates Of Deposit: Maturity And Strategies
  7. Certificates Of Deposit: Details To Consider
  8. Certificates Of Deposit: Conclusion

Let's recap what we've learned in this tutorial:

  • Safety is a hallmark of the traditional certificate of deposit (CD) sold by a bank or credit union.
  • Investors seeking a low-risk investment expect that many CDs, when held to maturity, will return the full amount of the original investment, even if the institution issuing the CD collapses.
  • A federally-insured bank CD has the backing of the Federal Deposit Insurance Corporation (FDIC), and CDs at credit unions are often guaranteed by the National Credit Union Administration (NCUA).
  • Traditional CDs typically yield returns greater than the rates offered by other insured investments, such as checking and savings accounts.
  • Rates vary from CD to CD, but they are near the current rate of inflation, in general.
  • While traditional CDs are popular with investors, CDs are also available in a variety of configurations offering a range of features and investment strategies.
  • The basic elements include the amount of deposit, the rate of interest (or return), the frequency of calculating interest, and the time frame (or term) marking the duration of the account.
  • In exchange for not withdrawing the investment or earnings during the term of a basic CD, the investor receives a fixed rate of interest – an interest rate that does not change for the entire period.
  • Sometimes, a minimum deposit amount is required, with larger deposits paying higher interest rates.
  • Penalty fees usually keep investors from withdrawing money from the account before the agreed-upon date.
  • Building on the basic model are CDs with many features.
  • Add-on CDs, bear CDs, brokered CDs, bull CDs, bump-up CDs, callable CDs and fixed-rate CDs are some of the options.
  • Other options include index-linked CDs, jumbo CDs, liquid CDs, uninsured CDs, variable-rate CDs, Yankee CDs and zero-coupon CDs.
  • The strategy an investor uses in choosing a particular CD from all of the options has to do with how the money in the CD will be used and what place it has in the investor's overall portfolio.
  • CDs can be used for short-term storage, long-term storage, income generation, conservative growth, speculation, hedging and more.
  • Examining the terms and conditions of a potential CD is key to selecting the best investment.
  • Investors can locate the right CD for their needs by taking all of the details into consideration.



Related Articles
  1. Investing

    Certificate of Deposit (CD)

    A certificate of deposit, or CD, is a common financial product sold by banks, thrift organizations and credit unions. This type of product is often called a time deposit. CDs are insured up to ...
  2. Investing

    CDs Vs. Inflation: Are They Keeping Up?

    Learn how to determine whether the money invested in certificates of deposit (CDs) can keep pace with the rate of inflation and how you measure inflation.
  3. 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.
  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

    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 ...
  6. Investing

    Are CDs Good Protection For The Bear Market?

    Certificates of deposit promise stable income in any market, but do they deliver?
  7. Investing

    CDs or Bonds: Which Investment is Better For You

    When choosing between CDs and bonds, investors who seek to maximize their returns but also want a large measure of safety should consider the following:
Frequently Asked Questions
  1. What's the Best Way to Contact Warren Buffett?

    Learn how to contact Warren Buffett and what kinds of contact is most likely to receive a response from him or from his company, ...
  2. What is the Financial Services Sector?

    A diverse group of companies, beyond banks and credit unions, comprises the financial services sector.
  3. Who are Whole Foods' (WFM) main competitors?

    Whole Foods' main competitors are Sprouts Farmers Markets and Trader Joe's. However, the recent acquisition by Amazon my ...
  4. What caused the Stock Market Crash of 1929 that preceded the Great Depression?

    Find out what led to the stock market crash of 1929, which in turn led to the Great Depression. It sparked a nearly 90% loss ...
Trading Center