What give more interest, CD or Mutaul Fund? Which are less in risk?

Question

I doesn't have much money, but I still want to save and invest for future needs. You know..?

Answer 1

You have many answers that state that a CD has no risk. Technically that might be the case. Actually, there is risk. The risk is that you will make no return at all on your CD after taxes. CDs pay about 5%. The inflation rate is about 4%. If your tax rate is 28%. You are in the hole. In other words you are paying the bank to let you have a CD.

Mutual funds indeed have their own risks. There is no guaranteed return. In fact the value of your investment might very well decline. The trade off is investing in a CD and making nothing or investing is a mutual fund with the probability of a long term return of about 10% annually--about 2% after inflation and taxes. You can beat the taxes if you open a Roth IRA and buy the mutual fund within the Roth IRA. That will yield an expected return of about 6% annually over the long term with no taxes ever. To improve your chances invests in more than one mutual fund and be sure you pick mutual funds with good long term records.

Answer 2

If you are younger than about 50 your primary concern should not be less risk, it should be capital gains and appreciation. Don't buy a CD in a bank, very, very, very low return. Study some mutual funds on your own. Rule of thumb is the higher the risk the greater the return. Based on your horrible, awful grammar, I would say go for the highest risk you can find.

Answer 3

some of these cd's out there are pretty decent right now (www.bankrate.com) but there are bad mutual funds out there as well.

Pro CD pretty much guaranteed return on it with no fees. con some are high investments and most are around 5% apy now.

Pro Mutual Fund Low investment (500-1000) can get you started easily pick right ones and get 10% or better return. con some fees which eats away at your investment quite a few funds have been sued for market timing pick wrong ones and lose 10% or worse as well.

Choice is yours.

Answer 4

CD is actually risk free, the bank will not go to the toilet, even if it did, there's the central bank to back it up. Mutual funds' can be riskier than CD. If you are looking for just savings, go with the CD. But remember this: higher risk, higher returns; lower risk, lower returns.

Good Luck!

Answer 5

A CD is almost risk-free (unless the bank or f.i. goes belly-up). The interest would be pretty minimal. A mutual fund could give you a better return, depending on what it consists of, but there is risk involved, especially if it's based on the stock market. You should speak with a financial adviser at your bank before making a decision.

Answer 6

Hi,

Witha cd there is little or no risk, Make sure it's fdic or ncua insured.

Mutual funds there is some risk much more than a cd.

If you don;t have much money I'd go with the cd, you can get like a one year right now for 5.5% still

Answer 7

CD gets u low interest with almost zero risk, Mutual Fund gets u dividend or higher appreciation or both. risk and returns are inter-related. higher the return, higher the risk.