Financial safetyĬDs can offer a guaranteed rate of return. At the top end, CDs are delivering just 1.25% APY - that's nearly nine percentage points lower than the stock market’s average.ĬDs can be a solid part of any savings strategy despite their relatively low returns for several reasons. With the stock market averaging a 10% return on investment, it's easy to see why some may question a CD's legitimacy as a savings vessel. We’ll dive into the benefits and drawbacks of CDs and look at historical CD rates. While they’re simple to use and understand, there’s some debate whether a CD is a good savings strategy. The benefit to getting a longer CD is they generally yield higher interest rates than their shorter counterparts, but the tradeoff is you must wait even longer to access your money. Many CDs are available with varying terms, ranging from 1-, 2- or 3-month CDs up to 5-year CDs. Certificates of deposit (CDs) are savings strategies that can earn you more interest than a checking or savings account, simply by committing to leave your money untouched for a specific term.
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