How to Invest in a CD

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Investing in a CD, or certificate of deposit, is best done as a long-term investment, as more interest is accrued over a longer period of time. Find a reputable and safe bank to set up a certificate of deposit with investing advice from a certified financial planner in this free video on personal finance.

Part of the Video Series: Investing Information
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Video Transcript

In today's market it is awfully risky for a lot of people and one of the things people are very interested in is how to invest in a CD or a Certificate of Deposit. One of the easiest things that you can do is go into your local bank and speak with a bank representative about some of the Certificate of Deposit options that they may offer. A couple of things to think about, one is the longer you are willing to have your money invested in a Certificate of Deposit the higher rate of return or interest you will probably receive. The reason for this is there is risk that interest rates may go up during the time that you are locked in to a current interest rate. Another thing that is important to consider is how safe is your bank? A place that you can go to research this for a fee is a website called High Line Financial. They actually offer a rating service on the strength and security of financial institutions of all kinds. This will give you the opportunity to check out how your bank stacks up against the others out there. Another thing that is important to consider when you are going to invest in a CD is how long do you want your money tied up? If you are going to need that money in a short period of time you don't want to lock in for a long length of deposit. Otherwise there could be a penalty to you when you are ready to withdraw the funds. Last but not least remember that your interest on most Certificates of Deposit is taxable as ordinary income.

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