We all have goals in life. And we all have different ways of reaching them. When it comes to setting a savings goal, deciding how to reach it depends in large part on how far off you’re setting the goal and how much risk you’re willing to take to get there.
If your goal is retirement, chances are you are going to consider an IRA, 401(k), or stocks and bonds as long-term methods of investment.
However, if But if you have a short term savings goal in mind, such as a down payment on a car or home, a good savings strategy would be a certificate of deposit, or CD.
Certificates of Deposit offer flexible terms, guaranteed interest rates, and involve a minimum amount of risk. CDs are a great way to set money aside without having to think about it.
CD terms and benefits vary. For example, Bank5 Connect offers CD terms from six months to five years along with a special two-year investment CD. Benefits of a Bank5 Connect CD include:
- Only a $500 minimum deposit
- No monthly maintenance fees
- All CDs insured for up to $250,000 by the Federal Deposit Insurance Corporation (FDIC)
- All CDs are also insured for over $250,000 by the Depositors Insurance Fund (DIF)
The Bank5 Connect two-year investment CD is a great way to set aside funds without making a special trip to the bank. A deposits as small as $10 can be set up for automatic electronic deductions from a Bank5 Connect checking account on a weekly, bi-weekly, or monthly basis. These particular Certificates of Deposit also have no monthly maintenance fees and are insured by both FDIC and DIF in the same amounts described above.
Flexible CD terms give you a greater window of opportunity to access your funds with less chance of facing a penalty for early withdrawal. Even with shorter term CDs, you benefit from both liquidity and security.
Speaking of security, using CDs is a less risky option compared to investment assets such as stocks, bonds and mutual funds which can vary considerably as they react to market volatilities. A CD allows you to lock in a rate at your chosen term and avoid risking the loss of any principal.
Certificates of deposit provide you with dependable growth potential. In fact, by opening multiple CDs with different maturity dates, you can take advantage of the best CD rates over varying terms that ultimately allow for flexibility and liquidity.
Incorporating CDs into your savings strategy is a simple, easy way to achieve your savings goals.