Quote:
Originally posted by Bamrak
CD's are just glorified savings account with very little return....
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Lol, at this time, this may be true...
A CD is a type of savings vehicle, as I am sure you know. Basically, you are Certifying your deposit. You form a contract with the institution and basically guarentee that you will leave a specificed amount in there for a specified term. The longer the term/the higher the amount, the better the rate.
You can, however, withdraw the fund prematurely, usually suffering a penalty. The most common penalty is 6 months worth of interest, which
can cut into the principle balance. For instance, you $1000 into a 3 month certificate, and decide the next day that instead you coulda used that money to do whatever, and withdraw it the very next day. The institution will take their penalty, leaving you with less than $1000 left.
However, CDs are very safe, and usually FDIC or NCUA insured, unlike mutual funds.
There are still CD's out there from a while back that have a 15% return on them, most will be coming due shortly. These are usually long term certificates that were made a long time ago...
With the current rates, it may not be your best short term option, one thing that is a little more risky, has minimum costs, and can potentially give you an excellent return are DRIP accounts. I have discovered an excellent service that allows you to invest in multiple companies for a very low ($5) fee. The site is
www.sharebuilder.com - feel free to check it out. If you are unfamiliar with DRIP accounts, they are basically stock purchases with your dividends reinvesting themselves. Get more info at
www.fool.com. In my humble opinion, an excellent way to invest long term, with manageable risk and a potential for high returns...
Hope this helped
