In my portfolio, I calculate the percentage of cash, bonds and stocks that make up the portfolio. Recently I've begun buying CDs. Are CDs considered cash, or bonds, or some other category? I'm finding that if I add their value to cash, it seems like I'm holding too much cash. Any suggestions?
2007-01-15 02:56:14 · 3 answers · asked by Arnold M 4 in Business & Finance ➔ Investing
CDs are generally considered bonds.
Cash is generally considered cash, checking, savings, money market and any other fund that can be immediately tapped without penalty. The key definition is usually immediate liquidity.
Bonds are interest bearing debentures, of which a certificate of desposits are. CDs generally have short maturity terms, flexible investment amounts and onerous selling terms (e.g. you lose your interest). Sure, money market is technically a summation of very short duration bonds that are pooled together as collateral against a more liquid pool. And yeah, technically you can sell your CDs if you forfeit your interest - but that's splitting hairs. The technical key here is that "bonds" value vary based on interest rates, either directly or through reinvestment risk.
2007-01-15 02:59:54 · answer #1 · answered by csanda 6 · 2⤊ 0⤋
If the CD expires after the 7 months, then your CD will immediately renew in case you do not something. The undesirable element is that the financial company will renew at a decrease interest fee, that's greater advantageous in case you bypass the the financial company and consult with a representative to discover the appropriate fee for you. After the CD expires, banks grant a renewal era of everywhere from 7-14 days which you will renew for an prolonged or shorter era, you additionally can upload money to the CD without penalty and withdraw money besides.
2016-10-20 05:46:04 · answer #2 · answered by kigar 4 · 0⤊ 0⤋
CD's are like bonds, same concept with less risk
2007-01-15 05:21:52 · answer #3 · answered by Anonymous · 0⤊ 0⤋