High Yield Certificates Of Deposit Advantages

If you are considering an investment in a certificate of deposit, you probably have many questions.  For instance, are high yield certificates of deposit really a good investment with the current financial economy?  Interesting, the answer is both yes and no, which will discover in this article.  The truth is that your specific situation would help determine if high yield certificates of deposit are the best investment option.[br]

If you are considering an investment in a certificate of deposit, you probably have many questions.  For instance, are high yield certificates of deposit really a good investment with the current financial economy?  Interesting, the answer is both yes and no, which will discover in this article.  The truth is that your specific situation would help determine if high yield certificates of deposit are the best investment option.[br]

The first thing is to understand what this type of investment is.  A certificate of deposit is a type of savings account that requires you to make a deposit.  The amount of deposit could be based on how much you want to invest or on a minimum required by the bank.  Then, your money would be locked for a period of time, which is called the term.  At the end of the term, the CD matures.  You can then withdraw your initial investment plus accrued interest or roll some or all of the money from the first CD to a new CD.

Now, when talking about high yield certificates of deposit, these CDs are as described above but those that would provide you with the best return on your investment.  The question is with the economy as it is currently, does not make sense.  For starters, before jumping into any investment to include high yield certificates of deposit, you want to compare what different banks offer.

When making comparisons among banks for different high yield certificates of deposit, you need to look at interest being paid, the type of CDs offered, what terms are available, and so on.  The most convenient method for making these comparisons is online.  Today, a number of excellent online companies conduct and compile all the information for you specific to high yield certificates of deposit.  Therefore, you would simply log on and look at the information offered.  An excellent online resource is BankRate.com, which is easy to use and convenient.[br]

The one thing you want to remember when looking at different options for high yield certificates of deposit is that to get the best return on your investment, you would need to keep your money locked for a long time.  In other words, taking out a one-year CD is not going to make much difference but if you were to find a bank offering a decent interest rate and you keep the money locked for six years, followed by rolling all of it into a new CD, then you can make significant money.

Remember, for high yield certificates of deposit to build a lot of money for you, even one, six-year CD is not going to do the job.  Instead, you would need to invest the most amount of money you can afford and then lock it for the longest term being offered by the issuer.  However, you would then need to roll the money in a new CD and when that one matures, roll the money again, and again, and again.  By the time you were ready to retire, you would have built a nice nest egg.

One other option we wanted to mention when it comes to high yield certificates of deposit is that some banks will allow you to make the investment and then enjoy an increase on interest rate.  For example, Ally Bank, which can be found online, offers a two-year certificate of deposit with an Annual Percentage Yield (APY) of 2.10 but during that term, you have the opportunity to increase the interest one time.