In these dark days of negative real yields, CDs make good place to park cash for a set period of time and that's about it.
Not to understate, CDs can be a very valuable resource when return of principal is more important than return on principal, thanks to the deposit insurance from the Federal Deposit Insurance Corp., more commonly called the FDIC. They insure deposits for up to $250,000 per account registration per bank.
Many people who invest in CDs understandably want more from an investment or savings vehicle than simply getting their money back at the end of the term. Ideally, deposit products such as CDs would pay enough interest to at least preserve the purchasing power of savings against inflation. As that is currently not the case, savers are actually losing value over time by leaving money in CDs.
There are alternatives that may provide higher returns, but they come with more risks. A story on Investmentnews.com from Feb. 12, "Seeking out yield in a no-yield world," outlines some options for investors who want to minimize risks while getting the best returns possible.
Here are the options the story lays out.
What CD alternatives would you recommend?
Get more CD and Investing News with our free weekly newsletter.
Follow me on Twitter.