Is Long-Term Investment a Good Option in Time Deposits These Days?

Commitment, in any other way is something you can’t simply get out from when you think you have had enough. In relationships, it involves respect and sacrifice. In Certificate of Deposits, it involves the economy and length of time. So when is commitment an advantage? When does a long term investment take a confused depositor? When you are offered an interest above the current average rate, does grabbing it means making one smart move?

The internet, daily newspapers, radio and other forms of media is bursting with news that says December 2009 has been indeed a yielding point for banks, investors and depositors. Due to the recession of the economy, banks experienced a lot of pressure that made depositors feel insecure to the point that some even pulled out their investments making the situation even worse.

Certificate of Deposits are a form of an investment via a contract between a depositor and a bank. It is a type of time deposit investment wherein banks issues a receipt that states the maturity of the CD and the agreed interest. A CD can also be defined as money that is deposited in the bank with a lock-in period and one that has a fixed rate agreed upon a period of time.

But what if you are under the contract of a time-deposit investment? Of course you cannot just claim your rights to your money. Rules need to be followed and contracts need to be respected. To be a good investor is also to be someone who not only decides based on the current situation but studies the future of the economy as well. Doing so will prevent future loss and result into having investments that yields huge benefits.

Remember that nowadays, one of the aftermaths of the recession of the economy is having low rates for bank investments. This is the time wherein a 6-month CD contract is far better than a 5-year investment. Although there is a big difference between the interest rate of the two, it is still wise to invest in something that will guarantee a result as we never know where this current recession will come to an end.

One proven effective strategy in CD’s is termed to by experts as “laddering.” This is a series of staggering a CD’s maturity date and then buying new one while making sure that the interests have already gone up. This is done over and over until you have reached your financial goal. Unlike investing in the stock market, a CD investment is insured by the FDIC ($250,000) as long as the bank of your choice is a member. 

With the current unstable conditions of the economy, investing for long-term is not always the best option. Taking one little investment at a time is far better than being bankrupt. You need to find the best rate there is in the market. The internet is the best place where you can compare interest rates of different banks. In addition to that, most websites have advisors that can actually help you plan your next move.

We are all looking for ways to earn more. One wrong move with investing your money can ruin your plans along with goals. Find the time to study and learn from others especially those who has been in the same situation and has already experienced finding their way up amidst chaos in the financial world. There has been a noted comeback of inflation. This only means that not until CD rates goes up, locking in an investment in long term periods mean a reason for someone to lose his purchasing power.