What are Bull CDs?

Do you consider yourself a trend following investor, specifically in relation to believing that the price of a security will go up? Then you are a bull. The same general concept can be applied to bull CDs, where the interest rate on a CD is associated with the value of the market index and the expectation is for both to increase over the life span of a CD.

Like other certificates of deposit, a bull CD is a timed financial instrument. However, when investors put their money into one, not only are they guaranteed a minimum rate of return but an additional specified percentage of extra based on the specific market index the bull CD is linked with.

If you consider yourself a conservative investor, then diversifying your portfolio with bull CDs may be for you. They’re typically very safe investments that also have the benefit of higher potential gains as part of the profit is paid based on increasing market indexes linked to the stock market. Even if the stock market declines, the CD will not lose its principal value, as only the interest rate is linked directly to the stock market. Plus some level of interest will be paid as that is part of the terms of a bull CD.

Finding bull CDs are not as simple as just searching the web for options. Investors need to conduct their due diligence and more than likely make phone calls to research the full assortment of bull CDs available, plus thoroughly investigate the market indexes the bull CDs will be linked to. After taking the time to research your options, you will be more than likely to find one suited to your tastes, time period and financial expectations.

About the Author

These articles are written by the in-house GOBankingRates team.