We’ve been through the thick or COVID-19, and we still are. However, there is hope in financial freedom. We have begun a series of investments to make in 2020. We will focus on Certificates of Deposit and discuss other investment opportunities in subsequent series.
Certificates of Deposit, or CDs, are issued by banks and generally offer a higher interest rate than savings accounts.
They have specific maturity dates that can range from several weeks to several years. Because these are “time deposits,” you cannot withdraw the money for a specified period of time without penalty, however, you get an interest at regular intervals from your institution.
Once a CD matures, you get your original principal back plus any accrued interest. You may even be able to earn up to around 1.8 percent Annual Percentage Yield.
CDs are usually a good choice for retirees because of their safety and high payouts.
- Although considered safe investments, they carry a reinvestment risk.
- Interest rates may fall, thereby causing investors to earn less when they reinvest principal and interest in new CDs with lower rates. The otherwise is that rates rise and investors are unable to take advantage because their money is locked into a CD.
A caveat with CDs is this, they aren’t as liquid as a savings account because you can’t get money back until your CD reaches maturity. It is possible to get your money sooner, but you will pay a penalty.
If this piqued your interest, you can invest with these banks:
Further your knowledge on Certificate of Deposits here.
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