Inflation feeding on the money invested in CD’s
Centuries ago, when our founding fathers formulated the policies for the government of the United States, little did they know about the financial challenges the people of their nation would be facing in the 20th century. There is nothing we can do to change the financial policies that govern the economy of the country, but we surely can foresee the potential challenges and take steps to ensure we don’t fall prey to it. As customers, there are many investment tools we look up for to ensure the money we have yields better returns, but with each passing year, getting good returns on the money invested is proving to be a herculean task and 2011 is not going to be any different.
For people who thought that the certificate of deposit gives you good returns on the money, here is a reality check. Thanks to the inflation, CDs are not as beneficial to customers as they once used to be. The rates are so volatile that customers are finding it tough to find the right rate to invest at. Despite that financial market being filled with a plethora of certificates of deposit, this task is cumbersome because of the rules and regulations governing each of them. While some offer deposits with no minimum limits set, there are other that offer high interest rates but set high thresholds, thus making it difficult for the common man to invest. The no-penalty CD does not levy any penalty when you withdraw the amount midway through the tenure of the CD, but the rate of interest you earn on such certificate of deposit is less. The customer has to compromise at every step.
While the banks and financial institutions that operate online or over phone offer higher rates of interest as compared to their brick and mortar counterparts, the risk associated when the customers invests in such banks is also pretty high. Gone are the days when customers could make money with their spare cash sitting in their bank account. Today, one has to either take risks to earn more or opt for a safer investment option which offers lesser returns.
