How do cd's work and are they a good invest for beginners?

Answer 1

Basically it's like a savings account, but you can only withdraw the money at a certain time. CDs (at least when I worked at the bank) ranged from one week to 10 years. You usually get a higher interest rate on a CD since the money is guaranteed to the bank. (They can loan part of your money to others in car loans, mortgages, etc, it's normal and legal.) The longer the term on the CD, the better rate you should get.

I think CDs are an excellent way to invest as long as you KNOW you won't need the money soon. If you have to withdraw the money early, the bank will charge you a penalty.

Most CDs will renewed automatically if you don't close them, so they will keep going forever.

If you have further questions or I confused you, you can contact me through my profile. Good luck.

Answer 2

CD's (certificates of deposit) are kinda like a savings account EXCEPT you don't get access to the money during the term of the cd without paying a huge penalty. The term of the CD can be anywhere from a few months to much longer. CD's usually pay a higher interest rate than most other deposit accounts because the money is "locked in" as far as the bank is concerned. The other consideration is the minimum amount to be deposited. This is set by the bank and can be any amount they want, usually $1000 but it could be more or less. I consider them a good place for a beginner to put money because they are insured by the FDIC. If you go with this option shop around for the best rates and periods according to how long you can lock up the money.

Answer 3

certifiactes of deposit are low-risk investments that yield minimal returns. you go to a bank and pick how long you'd like to invest (6 month, 12 month, 2 yr., 3 yr, etc.) and your yield varies by the length of time you choose. obviously, the longer the term the higher the yield. rates are usually around 3% i believe.

you'd do better to invest in a better known mutual fund. they're pretty stable and will give you a better return. do a little research online first, but if you do invest, do it for the long term.....meaning don't expect to get rich quick.

good luck

Answer 4

If you are young (I have no idea of your age) the best thing to do is diversify... there's a great show on AM radio (talk), called jim cramer's real money... in the show, he talks about how to do it. Basically, when you're young, you have time on your side, so you want a higher risk, higher yeild portfolio... try mutual funds; they can be made up of many things, and one can change the portfolio, to accomodate your investment style... reading books, and keeping up on the stock market is good too... there's no quick answer, all things take time and effort.