Basics of a bull and bear certificate of deposit

There are a plethora of investment options that are available to the investor. Certificates of deposit, savings account, money market accounts are few of the instruments options that one can choose from. Certificates of deposits are a popular choice. They are schemes where investments are locked for duration of time at a predetermined rate of interest. The returns are accessible to the investor on maturation. The periods of maturation are variable based on the banks offering these schemes. The higher the principle and duration of the CD higher are the returns. There are a variety of certificates of deposits that have been designed to cater to various requirements of the customer .E.g. of CD’s are bull CD bear CD, jumbo CD etc. One must be diligent in analyzing the terms and conditions of the CD’s that are available to capitalize on the advantages on each one of them.

Bear CD

It is a type of CD that is intertwined to the stock market. It is a CD of choice when an investor chooses to have an exposure to the market. A traditional CD has a couple of disadvantages. One of the main disadvantages is the fact that the rates of interest are predetermined and cannot be increased during the duration of the CD despite rising rates of interest at the market. This puts the customer at a disadvantage as he would be losing out on returns that he is entitled to receive. A bull CD overcomes this drawback by offering the option of updating the interest as and when the rates of interest rise. However the investor is not subject to the negative trends.  If the rates fall the investor is not liable to the negative market index. This gives an upper hand to an investor. He enjoys all the benefits without the pit falls.

Bull CD

It is the state of a market where the market index is on a rise. It usually succeeds a fall. One who knows to predict a bull market can utilize this CD to the maximum. There are a couple of indicators to identify a bear market. Usually after a fall at the market the bull CD starts prior to the rise of the economy. Low rates of interest are another indicator. Bullish percentage indicators are a helpful devises to predict the market. They have the ability to identify a bull market.