Savings Bonds and CD's
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Savings Bonds and CD's |
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Savings Bonds Certificates of Deposit
Long term savings is very important for your future. While college and a first job may be your only long term goals right now, retirement will soon be a financial concern - it is never too early to start saving! While both Savings bonds and CD's can be long term investments, it is important to point out that CD's are available as short term investments as well.
Savings bonds are traditionally offered by the government. There are three main types, EE/E, I, and HH/H. To learn about each type and to use the government's bond calculator, go to U.S. Savings Bonds Online.
Why should you buy savings bonds? They are:
Easy to buy
Safe from theft
A tax advantage
A liquid investment
An educational savings
A market based investment
Certificates of Deposit, or CD's, have become a very popular and lucrative way to invest money. Individuals can invest as little as $500 at a time in a CD for a time period ranging from six months to many years.
Interest rates for a CD vary with length of deposit and amount of deposit. For example, a deposit of $5000 for five years will have a higher interest rate than a deposit of $500 for six months. Interest rates also fluctuate with the market, so rates one year may be higher or lower than the year before or even the month before.
Many times an individual will incur a penalty for withdrawing his or her money prior to the end of the length of the contract. You should always read the fine print prior to making any deposits and initially deposit your money in a shorter CD rather than a longer CD if you have any inclination that you may need to be liquid.
To learn more about CD's and other long term investments go to the AARP's site on money management and investing.
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Last modified 06/18/02