You’ve likely heard the term CD thrown around, and at first you likely assumed someone was talking about compact discs, until you heard it in the context of banking or finances. If you’re new to investing chances are you don’t know what a CD really is or how it works, which is nothing for which to be ashamed. Even the most seasoned banking professionals were at some point in their lives ignorant to the ins and outs of CDs. The CD we refer to in the investing world is a certificate of deposit.
This type of investment account is a great option for those new to investing because there is not much risk involved and you won’t be charged monthly fees for holding a CD. While a CD won’t earn you the type of interest some other accounts or investments can, it will typically provide a higher return than most standard savings accounts. A CD is a great short or long-term option for those who want to be safe with their investment strategy, or as a stable supplement to a more aggressive investment portfolio.
When you open a CD you agree to keep your money in the account for a certain amount of time, and you won’t be able to withdraw it until that period is up unless you pay a penalty. That commitment is one of the reasons banks provide a higher interest rate to CD holders because they’re getting the benefit of a reliable account from which to draw for their own lending purposes. The longer the term you commit to, the higher the interest rate the bank will give you.
One reason CDs are a safe investment strategy is that most of them are backed by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000. The way you make money from CDs is something that wealthy people have utilized for thousands of years – compound interest. That means you’ll not only earn interest on your principal but also on the interest you’ve already earned.
Opening a CD in Sun City
If you are considering your investment strategies in the Phoenix area, a certificate of deposit may be the best option for you. If you live in Sun City chances are you are retired or maybe nearing the age of retirement. People in this age bracket and generally advised by financial professionals to adopt a relatively conservative investment strategies, and CDs are about as safe as investing gets. Making initial and monthly deposits into your CD is easy and similar to making a deposit into a checking or savings account.
We encourage you to stop by and speak with one of our experienced, professional bankers, who would be happy to assess your financial situation and make knowledgeable recommendations about investment strategies that may be best for you and your family’s needs and goals.
Contact Sun Cities Financial Group today with any questions you may have and one of our representatives will contact you soon.