In general, CDs are a timed deposit, meaning that you obligate your money to the investment for a limited period of time. There are short-term CDs that mature in a couple of months time and long-term CDs that can take years to mature. Investing in short term CD is good for those who don’t want their cash to be tied into an investment for a long period of time, such as a bond.
Short-term CDs tend to pay a lower interest rate than long term CDs, but still typically pay more than a standard savings account. Many times investors keep their money in short-term CDs as a safe haven until they know where they want their money to go next. Short-term CDs may also require a minimum initial deposit set at the discretion of the issuing bank.
If you need a decent place for your money to earn a rate of return while maintaining its core principal balance a short-term CD may provide you with exactly what you need. Before investing your money into a short-term CD it is important to comparison shop for the best interest rates out there. If you find an enticing rate, make sure to review all the terms of your potential investment before taking any action. By taking the time to educate yourself on the policies in the beginning, you will be able to properly plan and execute the next step in your financial building scheme.
