Highest Certificate Of Deposit , Who Has The Highest

By: EconomyWatch Content Team   Date: 3 March 2010

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When looking at the various options for investing your money, one that is low risk and has potential for a high return is a certificate of deposit.  However, as with any type of investment, some investments are lower and some higher.  In this article, we wanted to talk about the highest certificate of deposit, which would be the jumbo CD.  Although many people have never heard of this type of CD, it exists although it involves a significant amount of money.

Jumbo CDs are considered the highest certificate of deposit for two reasons – the amount required to invest and the potential for an incredible return on investment.  Although the concept is much the same, a Jumbo CD does have some differences.  As mentioned, the greatest difference is that it takes a lot of money to invest in a jumbo CD but when handled right, the investment is well worth making.

Typically, the highest certificate of deposit comes with decent interest rates, which are compounded on a monthly basis although some compound quarterly.  However, as an investor considering a jumbo CD then the goal would be to invest the most money possible and look for CD accounts that compound interest the most often, which would yield more money.

To secure one of the highest certificate of deposit accounts such as a jumbo CD, you would need to invest a minimum of $100,000.  Although individuals are welcome to invest in a jumbo CD, because of the amount required it is more frequently purchased by investors.  In addition, more investors choose a jumbo CD over stocks or even money market accounts simply because the risk is less.

When choosing one of the highest certificate of deposit accounts in the form of a jumbo CD, the principal investment amount would need to stay locked for a set amount of time.  During this period, also known as the “term” of the CD, the longer the money stays locked the greater potential for earning a lot of money.  However, the amount of time varies from one bank to another although most people prefer five to six years.

One very important note about the highest certificate of deposit such as a jumbo CD is that while other bank issued CDs are insured by the Federal Deposit Insurance Corporation (FDIC), a jumbo CD is not.  The reason for this is that insurance offered by the FDIC only protects up to $100,000 and since the minimum deposit for a jumbo CD is at least that amount, it would not have the same coverage as other CDs would.

Keep in mind that investing in the highest certificate of deposit is low risk and it can be worth the investment but if you were to withdraw any portion of the money prior to the end of term, or maturity date, you would not only be penalized but you would likely lose all of the interest accrued to that date.  Therefore, you need to consider a jumbo CD only if you have the money and can afford to keep it locked for years.


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