Bear CDs – possible short term gainers
We all have our own bank accounts, those are better known as checking accounts and they do not offer much choice when it comes to savings and investments. We use them to receive our salaries, pay everyday bills and as long as we have minimum deposits there they are “fee free” with most banks. Banks also like to call them “liquefied” cash accounts because the amount of money there will wary depending on your monthly income and spending.
When it comes to savings and investments banks have many options and among the popular are CDs (Certificate of Deposit). Those are well rounded financial offers to invest your money in with a nice guaranteed return over a short or long period of time. Depending on the money you have in your account and willingness to invest you can either chose bull or bear CD (there are more than those two, but this varies from bank to bank).
The question that comes to mind when thinking about CD is this – when and in which option to invest your money in. Practice has proven that if you are planning to make short time savings by investing in time of no major economic progress in the market, it’s always better to buy a bear CD. The best explanation in simple words is this – with no major economic growth predicted by financial experts, the possibility of having a huge investment by a company or corporation is not likely to happen, meaning no long term loans from bank (using your money) will be made. On the other hand, short term loans from the bank for smaller investments and smaller amounts of money borrowed by companies will still be there. Bank uses your money and gains profit in return – this is where your investment pays off.
When it comes to safety of your investments, you shouldn’t worry, all bear CDs come with insurance (under the law all investments must have FDIC insurance). There have been some major breakdowns of the financial market in the past, and today you simply cannot buy a CD without insurance; this is the only thing guaranteeing the safety of your money as well as your gain.
In conclusion, if you have some money to spare and you’re thinking about investing it somewhere, even with bad economy climate, bear CDs can be the right choice. These are short term investments usually limited to six months or a year and if economy bounces back in the meantime you can make further investments in other types of CDs.
