Short Term Savings Products

When you invest, it simply means that you are putting your funds in products, in this case short-term savings vehicles, which will allow you to reap high financial rewards.

Here is a list of the more common short term savings products you should consider investing in.

Savings account: If you are getting your feet wet for the first time in investing, you should consider this, as it is the most popular banking product people use. The interest rates of a traditional savings account vary between 2.0% to 4.0. This is better than keeping them at home. Investing in a savings account is relatively risk free, as these products are protected by the federal deposit insurance. Generally, the government protects the money you have on deposit to a limit of $100,000. Some questions you'll need to ask: What is the interest rate on your savings? Can the bank change the rate after you've opened the account? Will you pay a flat monthly fee? What if the balance drops? Is the ATM service free? Are the fees reduced or waived if you directly deposit your paycheck or government payments?

Money market funds: Money market funds are a specialized type of mutual fund that invests in extremely short-term bonds. Its shares are designed to be worth $1 at all times. It's a better product for investing in than the traditional savings account, with regards to the interest rate it will give you. But has a lower rate than certificates of deposit. However, the virtue of investing in the money market fund is that, while the interest rates may be lower, you can withdraw your funds when you see fit.

Certificate of deposit (CD): When you purchase a certificate of deposit, you are lending the bank use of your money, for a specific amount of time. In investing your funds, you're guaranteed annual interest payments. Investing in CD is relatively low risk, for it is FDIC insured for up to $100,000. If you are investing $200,000.00 buy two CDs. Before investing your money, shop around for the best bank interest rates. Consider the fact that by purchasing CDs, you are investing funds that will stay locked up for a specific period of time. Can you afford to have these funds locked up? For if you withdraw the funds before this matures, you'll pay steep penalties. If you are conservative about investing, this is a good place to start.

Financial experts recommend investing your funds into these short term savings vehicles, if you are looking to earn some interest in minimal risk products.

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Short Term CD Rates

In the market, the behavior of consumers is highly influenced by the current interest rate environment. This is because when the interest rates are high, consumers are expected to save their money, and when interest rates are low, consumers are expected to spend their money. With regard to investing in CD's, this is also very true, as the main premise of investing in a CD is to take advantage of high interest rates to maximize the returns on the investment. However, deciding based on the prevailing interest rates is not only limited to the decision of whether to invest in a CD or not. This is because it also extends to the decision on whether to invest in a short-term or a long-term CD. Given this, it is important that an investor be aware of how interest rates can help him better decide between the two options.

Short-term or long-term?

One of the best ways for an investor to assess on which option he should take, it would be a good idea for him to look at both the advantages and the disadvantages in investing a short-term or long-term CD. This is because doing so can help him weight the pros and cons, which can help him make the best decision. One of the biggest advantages in investing in a short term CD is that investors are allowed to make money in a short period of time, which can give investors access to their money when they need it. However, one big disadvantage is that the interest rates on short-term CD's are lower than what is offered for long-term CD's. This makes investing in short-term CD's less lucrative for investors.

As with long-term CD's, one of the biggest advantages is the high interest rate that is usually offered by banks for long-term CD?s, which means higher returns for this kind of investment. This is because given that investors would not have access to their money for a long period of time, the high interest rate becomes a trade-off for investors who would not be able to use the money for other investments. However, one of the biggest disadvantages to long-term CD?s is that investors cannot access their money until the CD reaches its maturity.

One of the most important factors that investors consider with regard to investing in CD's is the prevailing interest rate environment, as this can help them decide on whether to make the investment not. This also applies in the choice between short-term and long-term CD's, as the interest rates that are offered on them can also help an investor on which would be the best investment option for him.

CD Rates provides detailed information on Best CD Rates, CD Rate Calculators, CD Rate Comparisons, Certificate Of Deposit Maturation and more. CD Rates is affiliated with Cash For Future Payments.

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