Basics of a jumbo cd that you should know

The very basis of life is intertwined with money .Be it clothes, shelter or food, money is the basic requirement. Without it survival itself is a difficulty. There are an umpteen number of ways to make money but the biggest question that intrigues an individual is where to save or invest the money which he has made?

To cater to this precise requirement various methods have been devised. Savings account, Certificates of deposit, money market funds, fixed deposits are some of the popularly utilized investment vehicles. Each instrument has been specifically designed to facilitate certain specific requirements to keep the customer at an advantage. For example if one wants to hold an account that is accessible to him at any given period he could opt for a savings account of certain types of CD’s.

What are certificates of deposit?

They are financial schemes offered by banks and financial institutions where one can deposit a sum of money for a predetermined period of timed at a predetermined rate of interest. This is the basic plot of any CD. However there are innumerable variations to a traditional CD to avoid some of its disadvantages. The main disadvantage of a traditional CD is that the rates of interest are predetermined and fixed throughout the duration of the scheme. Another disadvantage is that the money that one invests in this CD is locked and not fluid. It is inaccessible to one if the need arises prior to maturation.

What are jumbo CDs?

Among various types of CDs the jumbo CD’s are certificates that deal with large investments in a safe and relatively risk free environment. The deposits of a jumbo CD can go up to millions. The rates are usually compounded and the rates of interest are deposited on a regular basis. Certain CD’s have the option of compounding it quarterly. The frequency of compounding is directly related to the final rates of interest. It has a direct bearing on the interest received on maturation of the certificate.

They are referred to as ‘Negotiable certificates of deposit’. They have high rates as compared to other CD’s, the simple reason being that larger sums of money are locked away for longer durations.

Benefits

• They are stable forms of investments with minimal risk.
• They are FDIC approved
• They are negotiable CD’s the terms of these schemes can be customized as per the requirements of the customer as the banks wouldn’t want to loose out on such valuable investors.