How to Invest in a High Yield Certificate of Deposit Today

Investing in a high yield certificate of deposit (CD) provides a nice alternative to a traditional savings or checking account. Most regular checking accounts pay little to no interest on your balance while a savings account is not that much better. The only downside of putting your money into a CD compared to a savings or checking account is that your money is not as liquid. Most savings accounts you can go and immediately withdraw funds, whereas a high yield certificate of deposit is setup for a certain term. This means that you are somewhat locked into the term that you identify.

Are you interested in learning more about investing in a high yield certificate of deposit? Check out the following steps that can help you get started earning more from your investments today!

Difficulty: Moderate

Instructions

1. Search for competitive certificate of deposit interest rates online or by calling local banking branches. If you are serious about investing in a high yield certificate of deposit, then you want to spend some time researching out the best investments. Look for traditional firms like banks, brokerage firms, insurance companies, and even credit unions for the best available rates. You can also take advantage of websites like Bankrate.com that run a search of best available rates in your local zip code.

2. Determine how much of your savings you would like to invest in a high yield certificate of deposit. Many institutions normally require a minimum investment of $1,000 to open up a certificate of deposit account investment. Some vendors even require CD's to be purchased in $1,000 blocks making it a little more difficult to set aside the appropriate funds.

3. Identify the most appropriate term for investing in a high yield certificate of deposit. There are typically several different options available including 90 day, 180 day, 1 year, 2 year, etc. Remember that investing your money in a CD locks you into a set time period, unlike putting your money into a savings account. Most of the time you will still be able to pull your money out, but will also be charged a penalty for early withdrawal.

4. Decide if you want to invest in more than one high yield certificate of deposit and build a CD Ladder. If you have a few thousand dollars available to invest, then you may want to break it up into multiple CD accounts to get the best interest rate available. Over time as accounts begin to expire, try to reinvest them to continue the ladder methodology.

5. Consider reinvesting your initial deposit and interest earned into a new high yield certificate of deposit once your existing account expires. If you don't need the money anytime soon, why not keep your money working for you by reinvesting it? The longer you can hold out from using it, the more income will be generated and you will be one step closer to financial independence! Obviously shop around for the best available certificate of deposit interest rates each time you are considering a reinvestment.

Tips & Warnings

• Diversify multiple high yield certificate of deposit accounts across multiple sources, terms, and rates to get the overall best deals.
• A high yield certificate of deposit that is not FDIC insured is an extremely high risk investment that could be wiped out by one small bank failure.

Resources

• Invest in a High Yield Certificate of Deposit