Is it worth investing in jumbo CDs given the long period of investment?

The holy grail of investments has always been to get the highest possible returns from the most secure investments. Now this is a contradiction of sorts given that the more secure your investment, the lesser is the risk that the bank is taking in using that money. And with lesser risk, you can only expect lower returns on your investment.

Jumbo Certificates of deposits are low risk investment instruments. They provide a very high rate of return over the period of investment. Compared to conventional certificates of deposits with a low rate of return and low risk, it is better to go for the jumbo certificates of deposit. But do be aware that you need to invest upward of a $100000 at a time in order to purchase a certificate of such a nature.

The term period for which your money will be locked in would be ranging between three months to even six years at a time. it is pretty obvious that the longer the time duration is, the more will be your rate of return from the investment. It is always better to stay invested for a longer duration with a larger amount provided you can afford to keep away from that money for the said duration.

The main disadvantage of these deposit certificates is that they are not insured by the FDIC. This means that in case the financial institution which offered you the certificate goes bankrupt, you will still get the money that you are owed. But in the case of jumbo certificates of deposit, you will lose out on the investment. The reason for this is that the investment is greater than a $100000 which is beyond the scope of the FDIC. But the rate of return promised by this certificate far outweighs the risk that you are taking.

Before investing the money, make sure that you do not require the same for quiet some time in the future. If you withdraw the money in between you will be losing out on the full potential of your investment. You will not only be losing the interest from that part which you withdraw, you will also lose out due to the excessive fines and penalties that will be imposed on you. The best thing for you to do would be to leave the money to lie around for the full duration of the deposit and then withdraw it while reaping the full dividends.

Jumbo certificate of deposits have the advantage of being a lot better when it comes to rate of returns. When compared to other certificates of deposits, you can expect at least up to fifty percent higher returns from the same. The only criterion that you have to fulfill is that you need to set aside a larger lump sum of money to make a deposit. All in all, the jumbo certificate of deposit is a means to diversify your portfolio of investments while staying well within the low risk area of operation.