How do I know which CD is best to purchase from the bank?

Question

I'm getting older now and want to start investing. However, I don't know where to start. I want to purchase a CD, but I don't know where to begin or which ones are best. Please help. Thanks

Answer 1

Find a solid financial bank, ensure the acct u are opening is FDIC insured, know ur terms and wait! True that the current rates are pretty much nothing but compare a checking with 0% to a cd at 3.5%... also, BOA has a riskfree cd (cd with penalty free withdrawals) which means u can back out of it anytime. that might be a good acct to start with...see if u really want to lock in funds

Answer 2

You have to first determine how long you want your money to be locked up. They have various terms such as 3 months, 6 months, 12 months,etc... Then go to a site such as http://www.bankaround.com and find the balance between a bank in your area that has a CD with the highest rate.

Answer 3

It depends on how old you are and what your situation and goals are, however, any bank offers CD's for investing. You can choose a short term like 3- 6 month CD or longer terms which provide slighlly higher interest rates.

That said, CD's are a losing effort once you take into consideration the low return on your investment, the taxes on the gains, and factoring inflation. For example, if you receive 4% return from a CD, you will be taxed on the gain, reducing the profit and then taking into consideration that inflation is at a rate of approx. 5%, you are losing money!

I highly suggest speaking to a financial professional such as your CPA or a trusted financial planner who can assist you in making the best choice FOR YOU. Be careful as there are some out there you put there financial interests (sales comissions) ahead of your interests.

Options for you: Invest in a proven mutual fund, stocks (many have decent dividend returns), real estate, become a private lender who makes loans at set interest rates and secured by real estate, or in some cases, annuities (be careful here to as they can be expensive).

Good luck.

Answer 4

Check out bankrate.com they list current CD rates in all areas of the US.