Assume You have a $1,000,000 and you decide to put it in a few CD's for 6 months for rate of 5.50% ( for maximum security) and earn an approximate yield of $55,000? What you Think? Also how is interest compounded on CD's.
2006-10-23 18:33:43 · 4 answers · asked by Anonymous in Business & Finance ➔ Investing
Typically, a 6-mo CD will credit interest at the end of the period. Some will have two rates stated (an effective yield and an APR). Take the APR, divide it by 2, and multiply by 1 million (your investment) to get the interest. Assuming 5.50% is the APR, you're looking at $27,500. (Note, the numbers might be off depending on how the bank does their day count, but it will be very close.
It sounds like you're looking to invest very conservatively, and this will be a good option. If you are willing to take a little stock market exposure, you could even consider purchasing ETF's which have low fees and mimic stock market returns. But keep in mind that you could also lose money if the market goes down.
2006-10-23 18:45:57 · answer #1 · answered by c 3 · 0⤊ 0⤋
CD's are good if going conservative. Take time to read the fine print. Some banks do allow transfer of interest monthly into another account(checking,etc.) Some allow rate adjustments quartely, 6 mths. Don't lock in anything long term, 12 months is fine. Interest rates will slowly creep up for inflation, may rise this week a quarter of a point.
2006-10-23 19:43:16 · answer #2 · answered by rwhz199 4 · 0⤊ 0⤋
Not all CD's are compounded. Make sure before you do it or it's not worth it. The market is doing well so stay w/ 6 month CD's right now. and no you're only going to make about $55
2006-10-23 18:36:35 · answer #3 · answered by 7yrs2go 2 · 0⤊ 1⤋
There are far better places to put your money than a CD.
2006-10-23 18:41:31 · answer #4 · answered by Dean * 4 · 1⤊ 1⤋