CD investments allow you to grow your money safely. Learn how they work and what strategies to use for the best returns. By understanding the basics, adding some strategy, and watching out for common pitfalls, you can grow your savings.
CD Investment Basics
If you're starting from scratch, learn what CDs are: certificates of deposit that guarantee you a return from the bank over time. By locking your money up, you earn a little bit more from CD investments. For a primer on what to expect when using CDs, read CD Basics and come back here for some more advanced strategy.
Using CD Investment Strategies
You don’t have to think very hard when you buy CDs, but you might improve your returns by using techniques to manage your CDs. Laddering, bullets, and barbells are all CD investment approaches that can help you reach your goals more effectively. Find an introduction to each of those strategies on the CD Strategy Overview page.
- Ladders involve using CDs of increasing terms so that something is always about to mature
- A bullet gives you numerous CDs that all mature at the same time
- A barbell approach sticks to short and long-term CDs (while skipping medium-term CDs)
Getting the Best Rates
Not all CD investments are the same. Rates change from bank to bank, and for other reasons. You should understand what influences rates and how to find the best rates. Over your lifetime, better CD investment results will mean more money to spend on the things you value.
CD Investment Safety
CDs are considered to be among the safest investments available. However, you have to make sure that any CD investment you’re considering is really safe. Make sure you’re at a government insured institution, and that you’re below the insurance limits.
If you don’t want to handle your CD investments by yourself, you can always hire somebody. Of course, it’s important to know who you’re dealing with and avoid scams and ponzi schemes. If you hire somebody, they may use brokered CDs, which are a little different from plain vanilla CD investments.