CDs’ Get Higher Insurance than Other Investments
Certificates of deposit boast of its high yield policy, which allows people to earn more in less time. With the same amount that you will spend for a savings account initial deposit, you can jumpstart an investing career with CDs and earn more profit in a couple of months compared to savings accounts.
Due to the greater amount of money involved in CD investments, the Federal Deposit Insurance Corporation increased the insurance for CDs. From the $100,000 maximum amount payable by the FDIC, it is increased to $250,000 for CDs. The rationale for this move is when people engage in CDs’; they will most likely reinvest their money into another CD, especially when the terms during that time is good. Also, most investors invest more money in CDs’ than any other type of investment because of the combination of high yield and investment safety.
As CD rates continue to rise, investment also gets bigger. To accommodate the concerns of the CD investors, FDIC decided that increase the insurance. With this increase in the maximum amount of insured money, more investors are persuaded that CDs’ are indeed safer than other investment opportunities.
For people who want to invest in CDs but are afraid of the time-lock period, they could do this strategy: get another investment which is highly liquid such as passbook/ATM accounts (or savings accounts) and invest a portion of the money in that area. Once the investor is able to split the investment money, he will feel more secured as he divides it between a high yield, low liquidity investment and its low-yield, highly liquid counterpart. Both options equalize the strengths and weaknesses of each other and thus allow the investor an access to his money through the low liquidity investment.
In terms of investment profit, both choices are beneficial to the investor despite the highly liquid investment generating less profit per annum. At least the investor is earning without facing any major risks. In addition to this, there is such a thing as high yield savings account, which is similar to the usual savings account offered in banks. The way to get such a deal is to deposit a larger amount in your savings account. The interest rate of this account may not be comparable to the interest rate of a CD. Nevertheless, it is slightly higher than the interest rate offered in ordinary savings account.
For people who want to see their assets earn interest over the years, it is best to engage in this high yield investment. There is no magical way to suddenly gain thousands of dollars in your investment unless you invest millions of dollars in investments. But over the years, the interest will be compounded and will create a significant income for the investor. What the investor should take into consideration is to transact with a reputable bank, which will provide a stable platform for the CD investment. The investor should also make sure that the FDIC insures the bank. This is the ultimate gauge on whether or not to transact with the bank. Unless there is a very special reason for transacting with that particular bank, a bank not insured by FDIC will only generate more risks at the end of the day.
So if you are thinking of where to invest your hard-earned money, better invest it in CDs. With the increased insurance and other safety nets present in CD investments, this is by far the safest and the highest yielding investment that can be done today.