What Is a Financial CD?

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A financial CD, or certificate of deposit, is a bond that matures at a specific date and pays the investor a set rate of interest. Consider purchasing a CD that increases in value depending on the value of the stock market with advice from a financial consultant in this free video on investments.

Part of the Video Series: Money Management & Personal Finance
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Video Transcript

Do you have excess cash sitting in your savings account or, perhaps, your checking account? Has your broker called you and said, "Hey, I have an idea. If you want to make a little bit more money, buy a certificate of deposit." Hi, this is Roger Groh with Groh Asset. And today, we're here to talk about certificates of deposits or CDs. What are they? Well, really, it's a bond that matures at a specific date up the road and pays you some rate of interest. That rate of interest might differ greatly, depending upon the institution and the length of maturity, and we'll come back and talk about you can check that out in a moment. In addition to interest, some CDs will offer you upside, depending upon what happens in the stock market, what happens in the real estate market, or perhaps what happens in gold or other metals. You have to look carefully at the wording in the certificate of deposit to determine whether or not that's true. Now, how can you do this? Well, if you go to bloomberg.com or reuters.com or pick up the Wall Street Journal, rates of return in certificates of deposit will be listed. Now, those will be basic ones, but they're certainly a good place to start. Again, rates differ significantly between different banks and the length of the maturity. In the end, a CD is a bond issued by the bank. Hope that helps. I'm Roger Groh with Groh Asset. Thank you very much for spending time with me.

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