What is Certificate of Deposit (CD)?

A Certificate of Deposit (CD) is a type of savings account that holds a fixed amount of money for a fixed period of time.You deposit a specific amount of money into the CD for a set term (e.g., 3 months, 1 year, 2 years). In exchange, the bank pays you agreed interest on your deposit.

What are the key features of Certificate of Deposit (CD)?

• Fixed Term: You agree to keep your money in the CD for the agreed-upon period.

• Fixed Interest Rate: The interest rate is set when you open the CD and remains the same for the entire term.

• Higher Interest Rates: CDs typically offer higher interest rates than regular savings accounts.

• Early Withdrawal Penalty: If you withdraw your money before the CD matures, you'll usually face a penalty.

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Note : Please note that the calculations are estimates based on certain assumptions, such as variable annual returns. This blog post is intended to illustrate the potential long-term benefits of consistent saving and investing, not to provide specific financial advice. The information presented on this blog, including any visualizations or projections based on average historical data, should not be considered financial advice. Investing involves inherent risks, and the value of investments can fluctuate significantly.

How to invest in Certificate of Deposit (CD)?

• Banks or Credit Unions : Check the competitive rates, open an account and invest

• Brokered CDs: Offered through brokerage firms, sometimes with higher rates.

Benefits of Brokered Certificate of Deposit (CD)?

Key Benefit: Banks offer varying interest rates, and managing multiple bank accounts can be cumbersome. However, investing in high-yield CDs from various institutions can often be achieved through a single brokerage account, eliminating the need to open accounts at multiple banks.

Example of Brokered CDs