what is better investing in a "CD", stocks or Mutal Funds?

Answer 1

It depends on when you plan on using the money.

If you need it in the next 3-5 years, the CD is right. Lower interest, no loss of principal.

If this is your long-term retirement fund, then Mutual Funds are right. Time will even out the ups & downs, and you will gain more in the long run.

Answer 2

It depends on your tolerance for risk / (gain /loss) and what your desired return is.

CD = Least amount of risk
Mutual Fund = Risky
Stock = Very Risky

Unless you have a broker I would stay away from individual stocks and go with an S&P 500 mutual fund. A mutual fund will allow you to spread your investment amongst a variety of stocks. The stocks will also be picked by a qualified professional. If you invest in a mutual fund I would suggest you add about 100 dollars each month to average cost. A CD is a good investment, but your money is not liquid for a certain time period. If you invest in a CD @ 5% for a year you can not touch the investment for a year. If you are young I think a mutual fund would be good for you because it follows the modern portfolio theory of not putting all your eggs in one basket. www.vanguard.com and www.fidelity.com are good mutual fund companies.

http://en.wikipedia.org/wiki/Mutual_fund
http://en.wikipedia.org/wiki/Certificate_of_deposit
http://en.wikipedia.org/wiki/Common_stock#Common_stock
Here is some reading for you detailing the differences.

Answer 3

I would agree with most everything said, it really depends on your goals, but with that being said I would strongly suggest staying away from CDs.

Now when looking at the difference be stocks and mutual funds: Imagine you and your family in two elevators - the first elevator has one cable and the second elevators has 50-100 cables, which elevator would you trust for you and your family to ride in? Obviously the one cable would be like investing in a single stock and if the stock falls so does your money, and the other is a mutual fund where even if multiple stocks fall you can still be held up by the others inside the mutual fund.

I hope that helps you in your investing, but either way find an investment specialist.

Answer 4

Mutual funds are not an investment. They are pools of funds used to purchase investments (usually stocks). As a rule mutual funds are better for most investors than individual stocks because diversity is built in. Over the long term CDs will return less than the stock market.

Answer 5

It depends on your goals. Is the money for retirement, or short term, etc.?

CD's typically are safest but pay the least interest. There are online savings accounts that pay better than a lot of CD's.

Mutual Funds are second in both safety and return.

Individual stocks can sometimes pay higher returns than mutual funds, but are also more risky than mutual funds or CD's.