Jumbo Certificate Of Deposit Definition

Although most people have heard of a jumbo certificate of deposit, we can assure them that for major investors, this is a safe and great way of making money.  This type of certificate of deposit is just like others but the amount invested and the terms are different.  For instance, a jumbo certificate of deposit requires a minimum of a $100,000 deposit although people can invest millions.[br]

Although most people have heard of a jumbo certificate of deposit, we can assure them that for major investors, this is a safe and great way of making money.  This type of certificate of deposit is just like others but the amount invested and the terms are different.  For instance, a jumbo certificate of deposit requires a minimum of a $100,000 deposit although people can invest millions.[br]

Because a jumbo certificate of deposit requires such a huge amount of money being invested and for years, this is something that the more serious investor will use.  In other words, while anyone can invest in a jumbo certificate of deposit, most people do not have the required funds needed nor can they afford to keep their money locked for four, five, or even six years.

However, for people that can invest in a jumbo certificate of deposit, they should know that this is actually a low risk option.  In addition, because a greater amount of money is being invested and for a longer period than with a standard CD, the payout once the CD matures would be greater.  Even with interest rates currently being much lower than a few years ago, this type of investment is still considered a good choice.

One of the most important aspects of a jumbo certificate of deposit is that it should be secured with a regular bank and only one that provides FDIC insurance, which is protection provided to the consumer by the federal government.  This means that if for any reason the bank were to fail, meaning it closes its doors and is no longer in business, you would not lose a dime of the initial deposit, although you might lose some accrued interest.[br]

Normally, the amount of a jumbo certificate of deposit that would be protected is $100,000 but the government has increased that amount to $250,000 until 12/31/2013 in anticipation of helping encourage people to invest larger amounts of money.  As more money is put into investments, the banks have more money to invest, which in turn, helps stabilize the economy.  While this is a great strategy, FDIC protection for a jumbo certificate of deposit will go back to $100,000 after the 2013 date.

When managed properly, the return on investment for a jumbo certificate of deposit would be far greater than investing your money in any other type of CD or other savings option.  It is unfortunate it takes so long to see the investment build but because most people use a jumbo certificate of deposit for retirement or business purposes, locking money up for an extended period is not that big of a deal.

Finally, banks want to make a jumbo certificate of deposit intriguing, which is why most offer higher interest rates than you would get with any other type of CD.  Just make sure you spend adequate time researching all the possibilities with various banks so you can make your money work for you the hardest.