INVESTMENT ACCOUNTS » Investing Money

You may have heard the term "CD" mentioned as an investment and savings tool. A "CD" is a certificate of deposit, which is a type of product offered by banks and credit unions that is very much like a savings account. It's "money in the bank," but it's not money you can touch until the maturity date of the certificate.

Like a savings account, a CD is insured by the FDIC and usually has a fixed interest rate, which makes the certificate of deposit one of the least risky investments out there. However, unlike a savings account, a CD is a type of time deposit, which means that it has a specific, fixed term. When you put money in a CD, you do so with the expectation that it will be held there for the entire term. There are generally stiff penalties for early withdrawal from a CD account.

You can buy a certificate of deposit for various terms. Some typical CD terms would be a three month, six month, one year, or five year CD. The longer term CDs generally offer the best CD rates, and CDs almost always carry a better interest rate than savings accounts from which money can be withdrawn at will. Fixed rates CDs are the most common, which protects your certificate of deposit from the fluctuations of the stock market. However, some banks offer CDs with a "bump-up" feature, which will allow for a single readjustment of the CDs interest rate during the term of the CD, if interest rates go higher while the owner of the CD is in the middle of their term. Other times, CDs are tied to an index such as the stock market.

A minimum deposit is typically required for a CD, and some banks may offer the best CD rates on larger deposits. "Jumbo CDs," with a minimum deposit of $95,000 to $100,000, usually offer the best certificate of deposit rates. However, some institutions will offer lower rates on the Jumbo CDs and off a high yield certificate of deposit with a smaller deposit requirement. Check with your financial institution to see what types of certificate of deposits they offer. Some institutions require a minimum deposit, and may offer higher rates for larger deposits. Sometimes the best CD rates will be offered by a credit union or a savings and loan. Also, be aware of the limitations of FDIC insurance. The government only insures bank deposits up to $100,000.

With investors encouraged by a government report that job losses were less than expected, U.S. stocks rose broadly. This is great news for those trying to keep their investment accounts in check despite the ups and downs the stock market has seen since the financial crisis.

About the Jobs Report

On Friday, the Labor Department announced that nonfarm payrolls fell by 36,000 in February. This is compared to a revised 26,000 drop in January. This is great news to economists who expected that the drop would be closer to 75,000 due to the massive storms that hit the East Coast in February.

Other great news on the job front, the unemployment rate remained steady at 9.7 percent. This is much better than the 9.8 percent increase that economists expected.

U.S. Stocks Increased

While U.S. stocks are always a minute-to-minute affair, they rose on Friday morning with the unexpected news that job losses were not nearly as bad as economists thought they would be:

• The Dow Jones Industrial Average shot up 89 points (or 0.9 percent) to hit 10533.25 on Friday morning.
• The Nasdaq Composite index was up 1.1 percent at 2316.89.
• The S&P 500 stock index climbed 1 percent to 1134.80.

In our still turbulent economy, just about anything can make stocks fall,which is whyinvestors are happy that some increases in U.S. stocks were seen. However, the great numbers for job losses may be turned around in March, economists believe, since weather will most likely not play a role in company decisions during the month.

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