2011年11月30日 星期三

Saving With Certificates of Deposit


Though they are somewhat of a staple of the financial services offered by banks, a large number of people aren't entirely sure how certificates of deposit work. They might know that certificates of deposit, or CD's, are usually purchased from a bank and that they last for set periods of time, but they might not know how savings are built with these CD's or what some of the terminology associated with CD investments mean.

The information below is meant to serve as an introduction to certificates of deposit, and should help to answer some of the more basic questions that you might have concerning CD's. As with any financial investment, it's important to make sure that you understand exactly how certificates of deposit work and how you can use them to augment your savings before putting your money into a CD. Check with your preferred bank for information about the specifics of their certificates of deposit or perform additional research online before investing your money.

How CD's Work

Certificates of deposit work much like common savings accounts, with the restriction that the money invested into the certificate is not to be withdrawn until the CD has reached its maturity. The maturity of a certificate of deposit is the point at which the amount of time that the CD was purchased for (also known as a term) has ended, and the CD no longer collects interest at the rate it previously was. Once a certificate of deposit has reached maturity, the full value of the CD can be withdrawn without penalty and the money is often transferred into other savings or into chequeing or money market accounts.

Maturity and Withdrawal

Since the money invested in a certificate of deposit will continue to draw a nice interest rate until the CD reaches maturity, it makes sense that you would be encouraged to keep your money in the certificate until maturity has been reached. Most banks and issuers of certificates of deposit don't want to be entirely unreasonable, however, and generally offer a brief period each year where the certificate can be cashed in before it reaches maturity without the usual penalties for early withdrawal. You should make sure that you know when this period is if you plan on cashing in your certificate beforehand, however... depending upon the issuer, some of the fines associated with withdrawal before maturity can be quite steep.

Choosing the Right Term for Your CD's

The term that you choose for your certificates of deposit will largely depend upon how long you want your money to draw interest before you need it. If you're planning on using CD's to plan for future events such as a wedding, additional schooling for your children, or retirement, you might want to consider a long-term certificate. If, on the other hand, you're wanting to use a certificate of deposit to set aside money for a vacation later in the year or another similar short-term circumstance, you don't want your money to be locked in a CD for an extended amount of time.

Using CD's to Enhance Your Savings

In order to use certificates of deposit to enhance your savings, it's important to remember that unlike traditional savings accounts you won't have as easy of access to your money in a CD. The advantage of this is that you can more easily resist the temptation to "borrow" from your savings. Several CD's with varied terms can help you to get the most out of your savings without locking all of your money away until a 10-year maturity date.




Jerry Warner writes general finance and loan articles for the Loans UK Online website at [http://www.loansukonline.co.uk/]





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Educate Yourself on Bank Certificate of Deposits


In the light of all the market turmoil that has ravaged countless individuals' retirement nest eggs and other investments in the last several years, many people have begun looking for other investments that feature less risk. A person looking for the safest investment that offers higher returns should consider a certificate of deposit.

About Certificates of Deposits

Certificates of deposits are both safe and reliable investments for investors looking for a slightly larger rate of return than a savings account and the safety of almost no loss to principle. Over the years, the various types of CDs offered has grown considerably. This has made it a little confusing to determine which one is best for a particular individual's scenario. Two popular types of CDs are callable and jumbo CDs.

Many people like to shop for the most advantageous certificate of deposit available to them by the CD's annual percentage yield (APY). This is an important means of comparing what CDs actually pay investors. Annual percentage yields can be used to compare and contrast two different CDs that possess the identical maturity date but provide different means of paying their interest, quarterly versus semi-annual, for example. APY takes into account how frequently the bank pays the interest on an investor's particular certificate of deposit. If a CD offers more often interest payments, then the return and APY is actually increased.

Callable Bank Certificates of Deposit

Many certificate of deposits investors will not be familiar with the concept of a callable CD. Callable certificates of deposit can literally be taken away from a CD owner following the expiration of the call protection timeframe. This would be done in advance of the CDs maturity..As an example, a five year CD that included a six month timeframe call protection could only be taken, or called, away following the conclusion of the first six months of ownership.

Banks like to offer such callable certificates of deposit as the risk of a dropping interest rate is then shifted to the buyer of the CD who made the deposit in the first place. In exchange for accepting this callable nature that creates a risk of losing the interest rate, callable certificates of deposit come with slightly higher yields than identical maturity date certificates of deposit that are not callable. This extra yield is a part of the compensation for the buyer being willing to take on the risk of losing a locked in interest rate.

Banks use callable CDs to manage their exposure to interest rates when they sell such CDs. To come up with the rates that they are willing to pay a holder of a callable CD, they use complicated option pricing models. This allows them to come up with an appropriate reward to offer the buyer who helps them to balance their interest paying deposits against their loans that they make. The bank is only hedging its risk with these types of CDs.




Hank Coleman is the founder of several financial blogs, focusing on topics such as how to find the best certificate of deposit rates and other profitable investing opportunities. He is an entrepreneur and professional in the government sector. Hank holds a Bachelor's degree in Business Administration, a Master's in Finance, and is currently studying for his Certified Financial Planning (CFP) credentials. Always looking for a trusted financial institution for advice and tips he tends to look up information at http://www.discoverbank.com more often than not.





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CD Rates - Finding the Best Deal on Certificates of Deposits


Get the best CD rates possible, but avoid missing out on future investment opportunities.

Certificates of deposits are one of the safest ways to invest your money for the future, much like a Treasury bond. Cd rates offer some of the highest rates of return that you can receive as an individual without risking any losses. Since they are insured by the FDIC by up to $250,000, there are virtually no risks. Still, it is worth your time to look for the best CD rates available, in order to get the most for your money.

Check Online

Some of the best rates can be found through online banks. Certificates of deposits offered by online banks often earn a higher interest rate due to the fact that the bank has fewer operational costs. There are also several different online marketplaces that you can take advantage of in order to find the best deals available.

Brokerage Firms

While CD rates offered by the bank can often be quite competitive, it is often possible to do even better by getting in touch with a brokerage firm. Financial advisers can often gain access to brokered CDs. These often offer the best CD rates available. This is because of the fact that the brokerage firm can offer access to a very large number of certificates of deposits, which allows them to negotiate better rates.

Check for Local Promotions

In many cases, a small local bank will end up in a situation where a large number of deposits are required. When this happens, a bank will often have a "sale" on certificates of deposits. This means that they will offer them with higher interest rates that usual, giving you a better return on your investment.

Consider the Term

The longer the term of the certificate of deposit, the higher the interest rate generally is.




The best CD rates are almost always offered on longer-term CDs. It is important to pay close attention to the economy when considering whether or not to invest, however. Rates can change rapidly, and if the economy is expected to improve in the near future, a good rate now could be a bad rate tomorrow.

Stacey Nelson





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2011年11月29日 星期二

Are Certificate of Deposits (CDs) a Good Investment Opportunity?


Certificate of deposit accounts are common investments offered by banks, credit unions, and other financial institutions. CDs are time deposits that offer a fixed interest rate in return for a fixed investment length of an agreed dollar amount.

But are certificate of deposit accounts truly good investments? The answer is yes, they can make terrific investment opportunities. Here are 4 reasons why CDs should be included in any investment portfolio:

1. CDs are Safe Investments

One of the greatest features about a CD is the safety. The FDIC fully insures deposit accounts for qualifying banks. This amount covers up to $250,000 per individual, per bank (as of 2011). This means that investors can rest assured that their funds are safe and secured, and fully backed by the FDIC. This is a great option for investors who want a low-risk investment.

2. Investment Earnings Amounts Are Guaranteed

The amount of money you invest is nearly guaranteed, so long as you do not withdraw the funds prematurely. Since the interest rate is listed in the deposit account terms, you will know your return on investment before you even invest the funds.

This makes CDs far more predictable than investing in money market accounts, mutual funds, or stocks--where the return on investment is often uncertain.

3. Interest Rates Are Competitive

Deposit accounts usually boast higher interest rates than savings or checking accounts. In fact, some of the highest CD rates have been near the 20% mark. Of course, rates will fluctuate wildly depending on economic conditions.

Rates are often based on the treasury rates, and so in times of bad economic conditions, the rates tend to be low, while times of economic boom usually lead to higher rates. They can even sometimes out-perform stocks or bonds, which makes it a much more favorable investment.

4. Flexible Deposit Lengths

Deposit accounts also offer very flexible investment lengths. Some banks or credit unions may offer terms as short as 1 month, or as long as 10 years, with many lengths in-between.

This is perfect for those wanting to customize the investment to suit their lifestyle needs. For example, a college student may want to save some money until graduation. In this case, a certificate of deposit would be a great investment choice, as he or she can select a deposit length that suits their needs.

Conclusion

If you are considering making an investment in a deposit account, CDs are a great choice. Always make sure to shop around, and select a bank with the terms that best fit your needs.




If you want more great tips on how to invest in certificate of deposit accounts, then please visit my website. You can also learn great tips on how to secure the latest cd rates, and more.





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Certificate of Deposit Interest Rates - Things You Should Know


The most important aspect of a certificate of deposit (CD) is the interest rate. After all, it would not make any sense to invest your money into something that has no return associated with it. It is important to know as much as possible about how interest rates work before you purchase a CD.

The interest rate that you get when you purchase a CD generally depends on several factors such as the amount you invest, the length of time you invest for, and the issuing financial institution that you are dealing with. For example, if you invest the minimum amount allowed for a short period of time, your interest rate will probably be lower. However, if you invest a large amount of money into a long-term CD, there is a good chance that you will be offered a higher interest rate.

In most cases, you will get a fixed interest rate with a certificate of deposit although they are available with a variable rate. With a fixed interest rate you are locked in at the rate that was assigned at the time of purchase. However, some issuers do offer a no penalty feature, also known as a "bump up" feature. This feature allows you one chance to bump up to a higher rate before your maturity date without being assessed a penalty. Normally, the only way to accomplish this would be to withdraw your money early and reinvest it into a higher rate CD, in which case you would be charged an early withdrawal fee.

As noted above, if for some reason you decide to close your CD before it expires, you will be charged an early withdrawal fee. That does not necessarily mean that you can not receive the money that you make from the interest on it. Many financial institutions will allow you to periodically withdraw just the interest earned without penalizing you but be aware that if you do this you will be decreasing the amount that you would otherwise earn if you leave it alone until it matures.

Ultimately, you want the highest interest rate possible with your certificate of deposit. There are some things that you can do to help you get it. Purchase it from your local hometown bank because they tend to offer better rates than the bigger, well known banks. Although it is not advisable, forgoing FDIC insurance could also help raise your interest rate. It also raises the risk level associated with your CD. Lastly, make sure that you are purchasing a personal certificate of deposit and not a business one.

Before you run out and purchase a certificate of deposit, arm yourself with information. Know what the best interest rates are, who offers them, and what stipulations are attached to them. Do not settle for the first offer you come across as you could lose out on a lot of money. While there are other important factors to take into consideration when purchasing a CD, it is the interest rate that determines how much of a return you will get on your investment.




If you would like information on Best Certificate of Deposit Rates be sure to visit www.cdinterestratesguide.com today!





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2011年11月28日 星期一

Considering A Bump-Up Certificate of Deposit?


The key appeal of a certificate of deposit (CD) is that - for the most part, as compared to other forms of investments - it offers predictable and risk-free return on your money. That's because a simple formula takes the amount that you're investing, the length of time you're applying it and your interest rate and tells you the exact total you can expect at the end date of the agreement, also known as maturity. Furthermore, it's a safe choice because this type of account is insured by up to $250,000 by the FDIC.

So it may not make sense to many investors to change the security and outcome of the situation by choosing a bump-up certificate of deposit (which may also be called a variable rate certificate of deposit). What this means is that your interest rate can be adjusted during the length of the agreement, which also changes the total you can expect to make in a way that you can't necessarily guarantee at the time you sign off on the agreement. Essentially, the idea is that you'll stand the chance to make more over the same unit of time.

How it works is that whenever the bank's rates might go up during the length of your agreement, you can appeal for your interest rates to go up to meet the current offer. Sometimes you can gain only one adjustment, if not a few. When you adjust is pivotal, because an earlier bump-up can mean more accrual over time, but a later bump-up may be higher. These rates are usually adjusted according to how the market is doing as well as how well the bank itself is doing. If you think that the economy or money market is going to do well during the length of your contract, you may wish to choose this option (which is not offered by all institutions that offer a certificate of deposit).

There are also a few trade-offs involved. In some cases, the bump-up option is only available for a certificate of deposit of a certain length or amount. For example, instead of taking an agreement for a few months, you may need to sign off on investing your money for several years. The original interest rate offered may also be lower than usual to start with since you stand the chance of gaining higher interest than the average over time. Consider all of the potential pros and cons of accepting a bump-up offer before signing off on your certificate of deposit.




TM Murphy is a professional writer who lives in NYC. She currently specializes in fashion, beauty, marketing and finance articles. For easy-to-understand financial and banking advice to use on topics such as a certificate of deposit, she often turns to http://www.discoverbank.com. TM Murphy has been writing full-time since 2006, when she graduated with a B.A. in English from Northeastern University.





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A Certificate of Deposit is Great For No Risk Investing


People are always looking for the next way to get rich quick. Unfortunately, there is really no legal way to do so unless you manage to score that winning lottery ticket. In this day in age, where fast food and text messaging rule, the virtue of patience has all but flown out of the door. It is easy to dream of ways to turn your ideas into money. It is easy to think about what you should have done with your money, such as buy stock in Apple twenty years ago. While these ideas may help you fall asleep at night, they are just not productive. The present is what matters and being smart with your money is the key to getting ahead. Many people are under the false belief that investing is a practice reserved for bankers and elite business people. Although stock market trading and investing may be best suited for those with some knowledge of the industry, buying into a certificate of deposit is something anyone can and should do.

The stock market is something that the average individual will probably never understand. What stocks to buy, when to sell, when to trade, and how much to invest are questions best left to the professionals. It is a very lucrative industry that has made a lot of people very wealthy. On the other hand, for those that jump into it without doing the proper research, it can deal a devastating blow. With stock investing, the investor must pay close attention to their stocks in order sell or buy at the right time. They must track other stocks for potential trades or purchases. It is a time consuming process that, when done improperly, can destroy bank accounts. When thinking about making an investment, it is important to know what you are getting into and how much time and money you can realistically invest. For those with the time, energy, and expendable income necessary, stocks are the way to go. For the rest of society, finding an investment with a guaranteed yield that pays relatively quickly is the smartest way to go.

Finding an investment with a high interest yield that does not tie up your money for years probably sounds impossible. However, there is a simple product available that almost anyone can understand and gain access to. While a certificate of deposit may not produce millionaires, it is one of the best options available to the average investor.

The best part about purchasing one is the high interest you can earn from the money you put into it. Depending on how much you invest, you can count on relatively large returns. With so many certificate of deposit options, the power of your investment remains with you. They are available in terms as short as six months to as long as a couple of years. How long you want your investment to grow is entirely up to you. The main difference between this option and a product like a savings account is that your money must stay put for the duration of your investment. The longer it stays, the more interest it accrues. The most important difference though, is that it earns considerably higher interest than any savings account. As opposed to investment options such as stock trades, a certificate of deposit is a no risk venture. The rates remain unchanged and the investment is guaranteed under federal law.

It is important to make wise decisions with your money. Keeping it tucked away under the bed or buried in the back yard may protect it, but it will never produce any positive returns. Stocks can produce very large returns, but also have the potential to crash down to nothing. The safest and wisest way to store your money is with a certificate of deposit. Making money off of secured money has never been easier.




Andy West s a writer on a variety of topics, including investing. With the recent sting that investors have felt as their accounts have dwindled, they look towards less riskier types of investing including a certificate of deposit.





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2011年11月27日 星期日

Certificates of Deposit


Banking is when you are in the business of saving or keeping money for savings or checking accounts or for exchange or for issuing loans and credits. You do transactions in a bank, either depositing or withdrawing or getting a loan. Banks make their money transactions easier and at the same time profitable. One of a number of banking transactions is the Certificate of Deposit. What is a Certificate of Deposit?

When you go to a bank, make sure you know the products they are offering you. One way of keeping your money and gain savings is thru CD. What is a Certificate of Deposit? A Certificate of Deposit or CD is a time deposit. Withdrawing money before maturity will incur penalty. Most individuals will have to ask what a CD is. It is generally issued by commercial banks and insured by FDIC bearing a specified fixed interest rate and can be issued in any form of denomination. The term would normally range from one month to five years.

What is a Certificate of Deposit? It's different from a regular savings account in that the CD has a specific, fixed term, and usually has a fixed interest rate. It is specifically intended to be held until maturity, at which, by that time, may be withdrawn together with the accumulated interest. Savings accounts can be withdrawn and have lesser interest. CDs have higher interest rates as compared to a regular savings account.

After knowing what a certificate of deposit is, another question is how we acquire such. CDs require a minimum amount of deposit. Higher principal would get a higher rate. Being aware on what is a certificate of deposit would give you a clearer scope on its benefits and what you can earn. Upon opening a CD, a passbook or a paper certificate will be issued. Most banking institutions have arrangements with their customers to have their interest mailed as a check or transferred into their checking or savings account from time to time.

Another feature on what is a certificate of deposit is when you close it. Closing it before maturity will lead to penalty rate. When a CD nears its maturity date, the holder will receive a mail notification. You can also do "rolling it over" or once again tying it up for another period of time, otherwise, the holder may cash it upon maturity.

It's always best you know what is a certificate of deposit and know its features before you get to avail of its product. If you have not much use of your money, better invest in CD. You can save and at the same time earn interest over a period of time.




Ian Pennington is an accomplished niche website developer and author.

To learn more about certificates of deposit [http://bestcdinvestment.info/what-is-a-certificate-of-deposit], please visit Best CD Investment [http://bestcdinvestment.info] for current articles and discussions.





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FDIC Certificates of Deposit


Federal Department Insurance Corporation (FDIC) certifies and approves Certificates of Deposit (CD) so that investors are much secured and take low risks with their CD investments. How a CD investment works largely depend on your total of CD purchases for a certain period of time. FDIC Certificate of Deposit investment rates increase in a matter of six months to ten years or more.

To ensure the safety of your deposits, you must enter into an agreement where FDIC Certificates of Deposit are federally insured before tendering your investment money to any credit union or bank institution. Banks selling CDs must carry FDIC insurance. You must remember that CDs are famed investments because it is covered by the government up to 100,000 US dollars per person. It can go beyond that amount for certain investors even up to 300,000 US dollars.

Many business owners find FDIC Certificates of Deposit to be profitable venture. Aside from being safe, FDIC covered CDs provide a considerably fixed interest rate that do not normally deteriorate within a term. Before going into any CD investment, you must verify if the offers are being insured by FDIC, otherwise it would be risky to embark on. Checking if the bank bears the logo of FDIC would be wiser thing to do before investing. If you are dealing with a credit union, its site must bear the logo of National Credit Union Administration (NCUA).

After making sure that your potential partner in FDIC Certificates of Investment is insured by the government, you can double-check its financial performance in the industry. It's always smart to know the track record of the bank or credit union you're buying your CD investment from. Both NCUA and FDIC websites will assist you in getting significant information you need.

FDIC Certificates of Deposit are wise time deposits. For a period of a 30 to 365 days or even 20 years, you are venturing into an agreement that the bank will keep your investment. Most investors are investing for 1 to 5 years, and in the long run, your capital increases. The longer the duration of your CD investment, the higher your profit becomes.

When investing in FDIC Certificates of Deposit, you must not presume that FDIC insured one-year investment matures in one year. Know the maturity duration and confirm the interest rate and how you will get your money with interests back. Many brokerage firms or deposit brokers now offer CDs that in some cases offer higher rates of interest. Wherever your broker intends to deposit your investment, you must check if it is FDIC insured. You might also want to figure out the record-keeping standards your potential broker is implementing. This is to assure that your investment is secured.




Ian Pennington is an accomplished niche website developer and author.

To learn more about certificates of deposit [http://cdinvestmentnow.info/fdic-certificates-of-deposit], please visit CD Investment Now [http://cdinvestmentnow.info] for current articles and discussions.





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2011年11月26日 星期六

Use A Certificate Of Deposit Calculator To Earn The Highest Rates Of Return


Not all certificates of deposit are created equal. Now that investors can use the internet to find the best deal and the highest rates of return on these and other investments, it is more important than ever to compare different rates. This ensures that you have the right investment to meet your financial goal and one that will earn you the highest rate of return for the amount of risk that you are willing to accept. The easiest way to compare the plethora of certificates that are offered by banks and investment firms is by using a calculator.

What Is A Certificate of Deposit Calculator?

It is an investment that offers a fixed interest rate and a set maturity rate. If the investor tries to cash in his or her CD before its maturity date, then there are early withdrawal fees and penalties. Also simply known as a CD calculator, is used to find out how much interest can be earned on a specific certificate of deposit. The investor simply has to enter a few pieces of information, and the calculator will analyze the annual percentage yield (APY) and the ending balance you can expect to receive from the investment. To use calculator, the investor will need to input data such as how much his or her initial deposit will be, the total number of months that will be invested, the published interest rate of the CD, and how often the interest will be compounded.

Why You Should Use A Certificate of Deposit Calculator

The calculator will show you the annual percentage yield which measures your actual interest earned per year and the amount of compounding interest. The annual percentage yield is a great way to compare different CDs with each other. The purpose of the certificate of deposit calculator is to show the investor how much interest a particular CD will earn. In order to earn the highest interest rate possible, an investor will need to compare maturity dates, interest rates, withdraw fees and penalties, the amount invested, and other attributes. A calculator is a great tool to use to compare these factors in determining the differences between each type of certificate of deposit and other investments with one another.




Hank Coleman is the founder of several financial blogs, focusing on topics such as how to find the best certificate of deposit rates and other profitable investing opportunities. He is an entrepreneur and professional in the government sector. Hank holds a Bachelor's degree in Business Administration, a Master's in Finance, and is currently studying for his Certified Financial Planning (CFP) credentials. Always looking for a trusted financial institution for advice and tips he tends to look up information at http://www.discoverbank.com more often than not.





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How to Get the Best Certificate of Deposit Rates


If you are looking for a way a low risk, short-term way to invest your money you might want to consider a Certificate of Deposit (CD). A CD is similar to a savings account in that it allows you to save money while you earn interest on it but because you can not withdraw your investment at will it is a much better option. They key to getting the highest return on the money you invest is to get the best certificate of deposit rates possible. A higher interest rate will yield higher earnings.

In many cases you will find that a broker will offer you the best CD interest rates. There are a few drawbacks with going this route. For one, they frequently require a much larger investment amount than a bank or a credit union. Often times they require a minimum investment of $10, 000 or more. Secondly, the risk is higher when you purchase from a broker because they may or may not be insured by the Federal Insurance Deposit Corporation (FDIC). You always have the option of specifically requesting an insured certificate of deposit or if the risk is too high for you, go to a bank or credit union. Lastly, brokerage fees can be ridiculously high. Make sure you know what the fees are up front before you purchase. You may find that you are better off going to a financial institution instead because the brokerage fees exceed the amount that you would make from the higher interest rates.

Pay close attention to the maturity date of your CD. Some financial institutions and brokers will automatically renew it when it matures if you do not specify otherwise. If this happens, you could potentially miss out on a higher interest rate because you are locked in at the old interest rate until it matures again. Rather than allowing them to auto renew the same CD when it expires, you are better off taking the money and reinvesting it into a different, higher rate one.

A long term CD is another great option if you are looking to make a long-term investment and you are not overly concerned about maintaining the absolute best interest rate. The longer you invest your money, the longer the bank, credit union, or broker has to make a profit from it. For this reason, they will offer a higher interest rate. It just makes sense to go this route because you are getting a great return rate on your investment, even if it is not the highest.

Getting the best rate on your certificate of deposit is not difficult. It just requires a little research and patience. If you are going to invest your money, why not get the highest return possible on it?




For more information on Certificate of Deposit Interest Rates visit www.cdinterestratesguide.com today!





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2011年11月25日 星期五

Certificate of Deposit - An Old Favorite


Certificates of Deposit might be the safest investment vehicles out there and in the volatile market of early 2009, this old favorite might be the best investment for today. What is it? A CD is basically your assurance that a bank will be able to use your money for a specified period of time. Just as you pay the bank back on their money with interest (a mortgage or car loan for example) they do the same for you with a CD.

What are the advantages of a CD? First, they are safe. If you have money and you know you are going to need it and can't afford to have any risk attached to it, get a CD. Next, they are easy to set up. It's as easy as shopping around for the best deal at an institution you trust and signing up. If you can open a savings account, you can open a CD. You also don't have to be a financial genius to make money on a CD. There aren't many different types (other than the length and amount of money invested.)

What are the disadvantages of a Certificate of Deposit? Remember that the safer the investment, the less money it will pay you. You don't get a lot safer than a CD so don't look to get rich unless you are rich already. At the time of this article, CDs are paying between 2% and 4% on average. Contrast that with a savings account and you will earn an average of 1.98% as of today. In order to get value from a CD, you need a fair amount of money and more importantly, you have to put it in to a long range CD. 5 year CDs can earn you close to 4% but that's a long time for the average person to have money tied up. On a related topic, I've answered this question a couple of times lately and then heard it on a radio talk show just the other day:

"I just received a large sum of money from an inheritance. I don't know anything about investing so I want something safe where I can leave it alone."

My answer to that: I call it stacked CDs.

Take the entire amount and divide it up. Let's so you have $50,000. Divide it in groups of $10,000 and put it in to a 1yr, 2yr, 3yr, 4yr and 5yr CD. This way you have 10K available to you in one year. If you don't need it, buy another 5yr CD with it and keep turning it over like that. As markets improve, you may want to talk to a financial advisor about slightly more aggressive ways to invest your money but don't forget about the Certificate of Deposit as a safe way to make a little bit of money during a less than positive economy.

In today's economy, don't forget about the CD. It isn't the most exciting investment vehicles out there but exciting almost always means volatile. Make sure to balance risk versus reward.




Tim is the author of http://www.elementary-finance.com, a financial blog providing beginning investment and finance advice to those who have a desire to learn the basics of investing and finance.





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How to Use Certificate of Deposits As Part of Your College Savings Strategy


The cost of college education increases at a rate that far exceeds inflation. It is also much greater than the average rate of return your savings and investments are getting, which makes it difficult to save enough money to keep up with the ever-increasing costs of higher education.

Saving for your child's higher education is a challenge faced by most families regardless of their income levels - but the money you save now will help prevent your son or daughter from graduating under a mountain of school loans they will struggle to pay for many years after leaving college. If you want to help your child graduate in something other than debt, here are some tips for developing a strong college savings strategy that includes certificate of deposits:

Start Saving for College As Early As Possible

The key to saving for college is to start when the children are young. The earlier you start saving the more time your money has to grow. Many people invest in riskier options when their children are young in an effort to increase their earnings, and figuring they have more time to recover if their risks don't pay off financially. As children get older and approach their college years, your choice of savings and investment vehicles are likely to move to less risky options in order to prevent the loss of money.

Risk Free Savings Strategy: Certificate of Deposits

Once you've saved up a sizable amount of money for your child's education, you might think about using fixed-rate certificate of deposits to give those savings a chance to grow risk-free until you need to use them to pay for college expenses.

When you open a certificate of deposit with your college savings, you will earn interest in exchange for agreeing to leave your money alone for a specific period of time. Once the money is in a CD, you don't have easy access to it. It's not completely impossible to withdraw money from a certificate of deposit before it matures, but it's certainly not recommended to take it out early because you will pay penalty fees and lose money in the process.

Depending how many years your child has before starting college, you can select a certificate of deposit with as little as three months to five years (or more) until it reaches it's maturity date. The longer the CD term, the higher interest your savings will earn. You may find using certificate of deposits as part of your college savings allows you to diversify and increase the amount of money your savings earns. While your saved money is held in a certificate of deposit waiting for it to reach it's maturity date, you can continue saving money in money market funds, high interest savings accounts, 529 plans, or Coverdell Education Funds to increase the amount of money you have when your child approaches their college years.

CD Laddering Increases Saving Potential and Access to Funds

Creating CD ladders may be a reasonable college savings strategy, as well. Once you have saved enough money through other means, you can withdraw it and open multiple certificate of deposit accounts with different maturity dates. By staggering the maturity dates of the certificate of deposit products you open, you can gain access to the money at pre-determined intervals. Plan it right, and you can have certificate of deposits maturing right before each of your college semesters begin, and gain access to money to pay for tuition and expenses right as you need it each semester.




Debra Dragon is a freelance writer for DepositAccounts.com. She writes about how to make your money work better for you through various deposit accounts, including savings accounts, interest checking accounts, IRAs, and money market funds.





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Certificate of Deposit Vs Savings Account: What Fits You?


For most people, the idea of investing is basically the same as saving up money. However, there are other ways for you to invest your money without really having to undergo a lot of risk. One such way is through certificates of deposit.

First, what is a certificate of deposit? You can consider a certificate of deposit as a time deposit, basically like your usual savings account except that you cannot really withdraw it as you see fit. A certificate of deposit usually allows you to earn a higher interest on your money but at the same time, you are discouraged to alter or withdraw that money before the fixed period of time.

If you are thinking of investing your money, and don't know whether you should go and open a savings account or if it will be better to invest in a CD, then here are some of the pros and cons of the two.

Pros and Cons

Savings accounts and certificates of deposits are all relatively risk-free, meaning if the bank collapses, you don't collapse with it as well and that your money is protected up to a certain degree. These are probably the only risk-free or minimal risk investment strategies that you can find.

One of the biggest difference between a savings account and a CD however is that there is a fixed period of time, between three months to five years, before you can really access the money you invested in a CD compared to the unlimited access that you may have with your savings account. However, banks and other institutions encourage you to invest your money longer by offering higher interest rates, meaning your money will be earning more in the longer period. The same way, a savings account may give you quick access to your money but then you might not be earning as much as you would have wanted compared to in a CD.

So how do you choose?

Your choice will basically depend on two factors: whether you need quick access to your funds or whether you want your money to earn a lot. If you think that you might need the money in the near future, then it may not be a good idea for you to invest in a CD. However, if you won't be using that money and you want your money to earn more while it 'sleeps', then investing in a CD might be the best way for you to go.




Jane Sanders at Certificate of Deposit Rates about getting the best CD rates. Learn more about Certificate of Deposit here.





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2011年11月24日 星期四

Certificate of Deposit (CD) Basics


"Never be frightened to take a profit. Better in your pocket then theirs." -Michael Levy

Certificate of deposits are great ways to save money and make a little profit from interest. Many financial advisors will suggest certificate of deposits as an alternative to a traditional savings accounts. Certificates of deposits (CDs) can be purchased from a brokerage firm, credit union, bank, or savings and loan institution. When purchasing a CD you are agreeing to leave a set amount of money with the bank for a set period of time. In return, the financial institution will pay you interest on that money and when the CD matures you will get your initial money back and small profit. There are many different types of certificates of deposits. Below is some basic information about CDs and some guidelines for choosing the right investment.

A key factor in determining which CD is right for you is the minimum deposit required to open up a CD. To receive the banks increased interest rate you must deposit at least the minimum deposit amount into the account. While most lending institutions offer affordable CDs for the average consumer, there are organizations which require thousands of dollars to open up a CD. Make sure you shop around and find a minimum deposit amount that works for you.

Another factor which can influence your CD choice is maturity length. Maturity length refers to how long you will have to keep your money in the CD. Maturity length can vary from just one month through 48 months. Many banks offer flexible maturity lengths. This allows the investor to open a CD at a maturity length of one month and then decide, after that month has past, to keep it in the CD for an additional length of time. The longer the maturity period the more profit you are going to receive from the account. However, if you need to access that money early you will have to pay early withdrawal fees which can be fairly pricey. The interest paid on a CD can also vary. Be sure to ask your savings institution when interest will be applied. It can be compounded yearly, twice a year, four times a year, monthly, and even every day.

There are also several ways you will receive your interest payments. You have it deposited directly into your CD account and it will continue to receive interest like the rest of your CD. You can have the interest payment mailed to your home or deposited into a checking or savings account. Certificate of deposits are great options for people looking for a stable and consistent rate of growth on their money. The main concern with CDs is liquidity. If you are interested in opening up a CD account speak with your local bank or contact a financial advisor.




Visit the Global Investment Institute and signup for our free Investing For Beginners E-Course at http://www.Global-Investment-Institute.com

Investment webmasters or publishers, please feel free to use this article provided this reference is included and all links remain active.





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Why a Certificate of Deposit (CD) Ladder Can Help You Find The Best CD Rates


Interest rates on savings accounts, money market funds, and certificates of deposits have been at their lowest levels in years. The problem is that no one knows exactly when interest rates will rise. It could be tomorrow or it could be years from now. But, what should an enterprising investor with money to invest do with the cash that they have sitting on the sidelines not earning interest? One way to guarantee the best CD rates is to create a CD ladder.

Do Not Lock In Your Money Long Term

Let's say a one year Certificate of Deposit (CD) earns a 1.34% annual interest rate. But for the pleasure of locking your money up for 5 years, you could earn 1.23% more than a 1-year (2.57% annually over five years). The National Average for a five year Certificate of Deposit (as of the date this article was published) is only 1.47% annually. That is not a lot of extra interest for the privilege of locking your money away for four extra years. If interest rates rise sooner rather than later, you would not want to be locked into a long term agreement with a bank earning low interest rates when rates are rising. One of the greatest ways to earn the best CD rates is through a CD ladder which does not tie up all your money when rates start to rise.

What Is A CD Ladder?

A CD ladder is a great way to hedge your bets against rising interest rates. A CD ladder is a version of dollar cost averaging but with Certificates of Deposit. You build a CD ladder by investing your money in CDs with staggered maturation dates. Initially, you should spread your investment evenly out across several CDs of varying maturity, for example a one year, two year, three year, four year, and five year Certificates of Deposit. As each one year CD matures, you would immediately reinvest your money into the largest term in your "ladder" - in this example a five year CD. This will help ensure that you will continue to earn the best CD rates as those rates increase for the longer maturity date CDs. This keeps one year separating all of your Certificates of Deposit like the rungs of a ladder, hence the name CD ladder.

Find the Best CD Rates Online Thanks To Competition

Thanks to the internet, investors have an incredibly huge selection of banks to choose from. Many do not have a brick and mortar branch to visit, but that doesn't matter if you are after the best CD rates. Because banks are competing for your business, the investor should shop around for the very best interest rates. Because of this competition, investors see interest rates creeping up and can except this trend to continue. It pays to shop around for the best CD rates.

Earning the best CD rates through an online bank could not be easier. Most banks are now offering Certificates of Deposit that you can invest in solely online with terms that range from three months to ten years. Investors can let their accumulated interest remain in their CD or even be transferred to another checking or online savings account. For the investor who is looking for a little more interest on his or her money, CDs offer guaranteed returns at competitive rates thanks to online banking.




Hank Coleman is the founder of several financial blogs, focusing on topics such as how to find the best CD rates and investing opportunities. He is an entrepreneur and professional in the government sector. Hank holds a Bachelor's degree in Business Administration, a Master's in Finance, and is currently studying for his Certified Financial Planning (CFP) credentials. Always looking for a trusted financial institution for advice and tips he tends to look up information at http://www.discoverbank.com more often than not.





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