|
CDs pay higher yields than liquid savings accounts,
but to earn that, you need to let someone else hold your money for
a specific period of time.
Once you've grown your liquid savings account to create
your emergency fund, you should consider a longer-term investment
that has a higher yield. One of the most common fixed-income investments
is a CD. In this chapter, we explain the different types of CDs
and the various strategies you can use to earn the most income from
them. We also spell out the penalties you might incur if you cash
in the CD before its maturity date.
 |
What you can expect to learn from this
chapter: |
|
|
 |
Lock
up your money; get higher interest |
| |
The basics of certificates
of deposit are explained. |
|
Types
of CDs |
| |
A look at the advantages
and disadvantages of the most common CDs: traditional,
bump-up, liquid, zero-coupon, callable, brokerage and
high-yield. |
|
Certificate
of deposit investing strategies |
| |
Savvy investors keep a portion
of their savings in fixed-income instruments like CDs.
These strategies can help you make the most of your CD
investments. |
|
Early
withdrawal penalties |
| |
A CD has a defined date
of maturity, and cashing it in before that time will incur
penalties. See under what circumstances those penalties
are not assessed. |
|
Chapter
2 quiz |
| |
Have you become a CD pro?
Test yourself. |
|
|
Chapter 2: Certificates of deposit
