Should you buy a certificate of deposit?
Can a banks' CD help you save your money and beat the inflation?
In this video, I'm sharing with you my opinion.
They say that it doesn’t make sense to buy certificates of deposit, because they (CDs) cannot beat the inflation. That’s right, that’s correct.
But let’s imagine the following situation. I have ten thousand dollars. I don’t need this money right now. But I know that I will need it in a year, in three hundred and fifty six days.
What should I do with this money? What can I do with it? The most common advice: never hide your money under the mattress. Well, I agree with this advice, because I could be robbed, or there could be a flood, a fire… And what’s even more dangerous, inflation… Yes, two-three percent is not too much. But I don’t want to lose that two hundred or three hundred dollars. Money must work for you. We all know that.
Another advice: Invest in the stock market. Make ten percent. In a year you will have eleven thousand dollars. That's possible, but the opposite situation is possible as well.
Look, I don’t want to make ten or five percent on money, I already invest in the stock market and contribute to my retirement account, I just want to be able to use my money in a year.
Bitcoins? No comments here.
A savings account. Bingo! But there is a little problem with savings account. Too low interest rates. And too much additional features. For example, I can withdraw my money at any time. It’s like a pocket. I don’t need my money in thirty or one hundred days, I will need it in one year.
So, the best solution for me is to go to the bank and buy a one-year certificate of deposit, or a CD, which stand for certificate of deposit.
This is going to be the best choice for me, better than investing in the stock market, better than buying gold, silver, cryptocurrencies, better than savings account because of a higher interest rate. My goal is not to make, double, triple or invest this money, my goal is just to be able to use it in a future. And I know exactly the day when I will need that money.
What are some benefits of buying a certificate of deposit?
The first benefit is that my money is insured by FDIC - the Federal Insurance Deposit Corporation. If my bank goes bankrupt, I will get my money back. That’s great!
Higher interest rates. Yes, I know and I agree that two or three percent won’t beat the current inflation rate, but additional two hundred - three hundred dollars is quite enough for me.
No additional features and options, like I cannot withdraw my money earlier. But I don’t need this option.
If someone has some amount of money, and they don’t need this money right now, but they will need it in future, I believe, that buying a certificate of deposit is a smart investment choice.
For some people buying a CD, if they understand why they do that, and what their goals are, might be the best solution to save money. For others, who, for example, want to start their investing journey, and don’t know where to start from, it might be not the best solution, because I do agree that CDs don’t beat the inflation.
Let me know your opinion about Cds, do you buy certificate of deposits, do you invest in Cds? Maybe there are some other more profitable and more secure options, what do you think about a “bonds versus CDs” battle? Let me know your opinion in a comment section below this video, and don’t forget to get your free gold investment guide that will help you learn how to diversify your investment portfolio with precious metals.
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Disclosure: I am not a financial advisor, I don't have a clue what you sould do with your money.