Wealth-Building 101 Using Certificates of Deposit

Certificates of Deposit or CDs is a banking term used to describe a short term loan made with a loaning institution. The time range of loan repayment usually spans from as short as 3 months up to 6 months. Generally speaking, CDs will differ in the interest gained depending on the amount of CD bought and the period of time it is locked up with the bank or loaning institution.

But despite being inaccessible to the depositor for a certain period of time, it also pays more interest compared to more liquid investments such as money market deposit accounts. In fact, most people who have passbook accounts are already moving to certificates of deposit because of the higher rate of returns. And besides, expert CD investors have already figured out how to deal with the low liquidity of CD investments.

There are lots of considerations when investing money. You might want to make a list and compare each type of investment from the other. But, from a wealth builder’s point of view, certificates of deposit are lucrative investment that can really generate good revenue in a month. But, of course, it has its own limitations. A piece of advice for you to follow is to assess whether you are financially well off right now and that you can survive life without withdrawing your investments too soon.

Certificates of deposit can earn higher interest rates than what your bank offers. The potential of earning more revenue per annum is of course higher because its time lock features give the rates a boost. But, since it is locked up, the liquidity of this type of investment is fairly low as well. So you might want to check if you have enough resources for at least 6 months without you having to pull out the investment before its maturity date. However, rest assured that you can do your withdrawal when the need arises. But in doing so, you will have to suffer hefty penalties.

Another investment opportunity that you can do with CDs is to buy them when there are enough funds to do so. Select the maximum length of time it takes before CDs can be withdrawn. Doing so will give you higher interest rates than shorter lock-in periods. Let the CDs earn interest through time and get to keep the monthly interest. When you feel like you already need the money before the maturity date comes, simple sell the CD to other interested buyers. That way, you can get your CDs’ worth without being penalized. Also, the buyer is in an advantageous position because after couple of months or years of interest-gaining CDs, they will be able to get back their investment plus interest.

Certificates of Deposit are really wise investments for wealth builders like you and me. There’s much potential to this kind of investment and many people wouldn’t pass off the chance to engage in such profitable business. There are ways to solve the problem of low liquidity of CDs so there’s practically nothing to worry about if you do invest in it. Just ask those who have gone this path before you. The internet can lead you to many people who are already done with their CDs investments and are living the life they want now.

Do yourself a favor and find more ways to earn aside from your 8-hour office job. There are more ways to gain wealth aside from depending on a monthly salary. Retire earlier than what your company dictates and enjoy a stress-free lifestyle. Get started ahead of your colleagues who are still sticking it out with the company paycheck, start investing in CDs now!