The significance of opting for jumbo CD

One of the essential issues considered by most of the people who are interested in different strategies of investing their funds is the rate of interest and the amount of return they would eventually be earning from the investment. This is quite natural because all the investors prefer to invest their income in a venture that can assure them a handsome profit.

Certificate of Deposits are a popular mode of investment with specific features that the investors find to be attractive. The features of the CD include promising a high rate of interest, risk free savings and virtually a short term. Hence the same is preferred by majority of people in the form of investing in jumbo CD, which is normally due to the fact that they are offered an option of increased rate of returns for a higher amount of investment. The minimum amount of investment in a jumbo CD is somewhere around $100,000.

All types of Certificate of Deposits are involved with less risk and most of the CDs are insured with FDIC insurance – Federal Deposit Insurance Corporation. Even in case of an unfavourable or unexpected circumstance in the future, the rate of return prescribed at the time of investment of the huge amount and the amount of investment in jumbo CD is guaranteed with the insurance coverage at the time of maturity. But FDIC insurance is applicable to a maximum investment of $250,000. Moreover, to ensure the high earnings for the investors, the jumbo CDs are eligible for withdrawal until the period of maturity and charged with the heavy amount as penalty for partial or complete withdrawal before the maturity period. The term of investment ranges from the minimum period of three months to a maximum period of six years.

Investment in jumbo CD is considered as an effective strategy towards earning a good interest in a shorter period. Interest rates are generally higher when compared with the rates offered by other conventional CD’s. Short term CDs are offered with a maximum maturity period of one year and a minimum period of three months. For instance, the rate of interest offered by a short term certificate of deposit is very less as compared to the rates of the jumbo CD.  Since the jumbo CDs are also offered with a minimum maturity period of three months, in a smaller period of time, the investor is able to earn a good amount of interest.  Moreover, the expected minimum balance requirement in a jumbo CD is unexpectedly lower when compared with other investments. 

Additionally, investment in a jumbo CD is recognized as an effective investment in comparison to a standard bank account or a saving account. When the investor decides to invest a huge sum of money in a jumbo CD, he can negotiate with the banks to avail the best possible terms and conditions on the investment. The banks and other financing institutions offering the jumbo CD also encourage the customers and offer them satisfied terms, as the huge investment happens to be a vital asset to them after all.