3 Important CD Investment Strategies to Grow Your Money

If you take a look at the trends of the CD rates offered, you will notice the fact that certain trends have been there constantly. Actually, financial institutions offer better rates when the customer chooses a fixed term to withdraw money instead of withdrawing on demand. So, if you do not touch your money for a longer duration, you can enjoy better interest rates. For example, if a 3 month certificate of deposit earns you only 0.8% of interest, a 2 year CD can get you a 2% return.

Investments on CDs are a safe way to grow your hard earned money. By learning how they actually work, you can find a better strategy to get higher returns. So, understand the basics and grow your money. For those who are new to CDs, a certificate of deposit is nothing but a return given by the financial institution on the money you have deposited. It is a process of locking your funds for a fixed period of time so that you can get a better interest rate in return.

Some Good Investment Strategies

Though you do not need to break your head before you buy a certificate of deposit, it is good to learn certain strategies so that you can get some more money from your investments. Ladders, barbells, and bullets are certain strategies which play an important role in getting you more money in the whole process.

1. The Ladder strategy is simply about using CDs of higher rates. You can simply buy a few CDs which mature after different periods of time. At any given point of time, you will be near the maturity of a particular CD which will help you access your money.
2. The bullet strategy involves buying a few CDs and planning their maturity on the same date. If you need your money at a time on the same date in future, you can do this.
3. The barbell strategy involves investing in only the short and long term deposits, eliminating the medium term deposits.

You should be ready to divert your finds towards the debt repayment and try to clear them off at the earliest. Which means that this agenda should feature in your priority list and apart from the fixed strategies you should be on the lookout to save, cut down on your expenses and clear off your debt?

Playing Safe

If you do not have any idea of such strategies, you need not give up because it is all about growing your money and finding the best way to get higher returns. Stick to the basics if you have no idea about using strategies. If you are able to look at the trends of the interest rates, you can gain a clear picture about how much you will be able to earn after a fixed period of time in future. Ensure that you lock your funds without withdrawing any money until maturity. This would increase your chances of getting more money.

Before you invest, you must remember that not all investments get the same returns. Rates vary from one institution to another and several other reasons also impact them. Knowing what influences the rates would help you grow your investments in a better way.

Begin by making small changes in your budget. Try and increase your monthly payments and see to it that you make incremental payments towards the principal you owe on bigger loans like the mortgage. If you are comfortable with an yearly payment plan you can take it as well. This can help you lower your principal dues in a great way.

Author Box:

Peter Dav is a finance expert who gives useful advice on investment matters and trading as well. For better tips on investing in CDs, he recommends visiting http://cdratesprophet.com/

Tags: Certificate of deposit, Interest rate, Investment, Money

Category: Investing