Sound Investment
A few months ago my friend, Lisa, sold a large farm she inherited from her Grandparents. The money from the sale had been sitting in her savings account since then because she really had no idea what to do with the money. After a little convincing she finally agreed to talk to someone at her bank and to a local financial planner about the best ways for her to invest.
Although she learned about many types of investments Lisa ultimately decided that she was most comfortable getting three certificates of deposit with different maturity dates and interest rates. By keeping the investment amounts within the FDIC insurable range Lisa also has peace of mind that her money won’t just disappear.
I was really impressed with all Lisa had learned when she explained that the short term cd had a lower interest rate but guaranteed she would be able to retrieve her funds before next Christmas. She plans to withdraw the intrest and then reinvest the principal. The three year and five year cds offer higher interest rates, and higher early withdrawal penalties, and will help Lisa to build her retirement fund.
I was so impressed with how much Lisa learned and how successful she was at handling her new investments that I decided to read a little more on my own. The Securities and Exchange Commission has articles on all types of investing and recommends that you check the fine print when shopping for cds. It seems that some certificates of deposit have extreme penalties, maybe called in early by the bank, and their maturity dates may not always be clear.
The other thing I learned is that it rarely pays to be a rate hopper. For example if you have your cds at Hometown Bank and see that Aurora Bank CD rates are much better you don’t withdraw your money early just to reinvest it with the better rate. I imagine if you did that very often the early withdrawal penalties could quickly eat away at your investment. It’s best to shop around first then stick with your chosen certificate until it matures.
I’m really glad Lisa found a way to invest her money without a lot of risk and I really enjoyed learning more about certificates of deposit. They’ve always been one of those things I knew about but didn’t really understand. Hopefully soon I’ll have a little money to invest and at least a little bit of a clue what to do with it.
Informative and useful!
Anncash16′s last post … My Metrobank Classic Credit Card Application Approved and its Advantages
Investing your money, though, wouldnt let you reap greater interest but would be safe in a bank. Ofcourse you cannot just withdraw your investments whenever you want, but at the end of the maturity period when you see your money you would really feel happy.
Elvirah’s last post … Wish i were in Bethlehem….