Your investment choice – The link to favorable savings

An investor would like to avail the best suitable option for him and when it comes to the decision between making investment in a certificate of deposit and the money market, the judgment needs to be an efficient one in order to make the best use of the hard earned money by the investor. The first advantage associated with the certificate of deposit I that the investor is in a position to approximate his earnings at the end of the maturity period.

When the investor has a fair idea of the returns, he can judge the amount of risk that he can take in his investment. The second and one of the most important advantages of the Certificate of deposit is that they are insured by the Federal deposit insurance corporation. This insurance is covered to a value of $100,000. This option is the most useful option that can be availed by those investors who wish to get returns till their retirement and want to maintain some portion of their capital for future use. Thus, it is the best investment for investors who prefer low risk and a favorable amount of return on their investment. However, there is a disadvantage associated with the certificate of deposit investment. If the period of maturity is chosen to be considerably long by the investor, then the rate of interest that would be charged would increase. This would ultimately result in losing of access to the fund invested by the investor. Hence, if an investor wishes to avail the certificate of deposit and he wishes to have a long maturity period, then the decision to invest his capital in other ventures cannot be implemented because the principal would be un-accessible.

Let us consider the advantages associated with the money market. The main focus of the money market is to maintain a constant share price. The financial advisors involved in the money market transactions would invest the funds of the investors and government securities and different mutual funds so that a favorable return can be provided to them. The major advantage is the level of liquidity with which the money markets are associated. Cash is always available before the investor for disposal and so, multiple uses of the invested cash can be made by the investor. The withdrawal of cash is also not a major issue when it comes to withdrawal from money markets. The cheque books that are being issued to the investors help them in easy withdrawal of cash at any point of time. Thus, it is a flexible investment option. However, some financial institutions limit the number of checks that the investor can draw upon and this would create problems for him in cash withdrawal when it is really needed. Also, the rate of interest involved in the money market is associated with the level of deposits by him unlike certificate of deposit in which the interest would be depended on the period of maturity.