Best Certificate of Deposit Options
April 2, 2009 by Derek Powell
Filed under Stock Exchange
When looking for the best certificate of deposit, think of your investment needs. Some of the options available to you include a higher yield for a shorter term or a lower yield for a longer-term; either is safe and represents an easy way to grow your money. Whilst CD offers are available from your local credit union or high street bank, make sure that you check out the great deals available online.
Before determining which is the best certificate of deposit for you, research the various options and features. Maturity terms could range from six months to 20 years, so choosing a length of time that fits your investment strategy is important. Interest rates are also a deciding factor, with a fixed or variable rate.
Laddering is a term which relates to combine certificates of deposit with others in your portfolio so that you obtain your best rate of return. You can find your best certificate of deposit this way as you will invest in several CDs with various maturity terms. As each matures it is rolled into another. This method is widely regarded as a stable form of investing, with liquidity options should you need them.
The Callable CD is the best certificate of deposit for those willing to take a risk. Generally sold through a broker, these CDs have higher interests rates, but the issuing bank can call them in at any given time, especially if interest rates have dropped and continue to stay low. This possibility of termination makes them a risky venture because when they are called in, you would have to reinvest under the current rate.
The Bump-up CD is the best certificate of deposit for future planning. You can invest at a certain rate but can bump up when interest rates rise. Check how many bump ups are allowed within the term of your agreement.
If you have a large amount of money to invest, the Jumbo CD is the best certificate of deposit for you. This type of CD is usually reserved for amounts over $100,000 and represents a safe vehicle during a volatile market. Rates are very attractive due to the size of the financial investment. Many people are concerned these days about exceeding the $250,000 FDIC limit, so there are also mini jumbo CDs for under 100 K.
Among the best certificate of deposit options is the high-yield CD. This investment vehicle offers extremely high rates for a short period of time, such as six months or one year. But the benefit of great rates means a penalty will be charged if the money is withdrawn before it matures.
If you may want to withdraw funds before the expiration date of the certificate, no penalty CDs may represent your best certificate of deposit. This type of CD gives you a guaranteed rate, allows you to withdraw without penalty, but does not attract high interest rates.
