Benefits of Investing in CDs

Video Transcript

"This is financial adviser, Patrick Munro, talking about the benefits of investing in certificates of deposit. As a young person, you may want to start your financial journey by investing in certificates of deposit and building up a reference, if you will, with the bank. Certificate of deposit is a first line asset, that anyone can have with a bank. If you place a certificate of deposit with a bank, you can borrow against that, as well, to build your credit, going forward in life. A certificate of deposit, if you choose not to borrow against it, will grow with a rate of interest that's declared by the bank. Make sure you look for the very best rate, that's available, because banks are competitive between each other. Certificates of deposit also form an insurance for you, in times of need, if your income was cut off and you've taken the forethought to put money away, in a certificate of deposit, than you'll have money to fall back on when times are not as good. Certificates of deposit, of course, you have to pay taxes on them if they're non-qualified, meaning that they're not part of an IRA or a 401K plan. You can also get them in an IRA or a 401K plan, which means that the interest that you get on the certificate of deposit, is deferred until you take it out in retirement. This is Patrick Munro talking about the benefits of investing in certificates of deposit."