Is investing in cd's a good investment?

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Is investing in cd's a good investment?

Poor and Hungry57

CDs are ok but people don't really consider it investment. It's more about keeping the value of money at inflation rate. But it's better than doing nothing like many people.

No risk = No reward
High risk = High reward/loss

I suggest looking into Municipal bonds to get tax exemption

jfrfvr4

Right about now it might be a good investment.

Pook

It's a very safe investment. Now is the time as interest rates will be coming down soon. But the only way to make real money on investments is to have a mixed portfolio with stocks involved.

HH@20

Unless you make almost no money, CDs are a bad investment.
Why? Inflation is approx 3%. CD rates are approx 5%. Tax is approx 25%. 5% - 25% = 3.75%. You are making 3/4 of 1 percent on your money. I think that's not good.

noble8fold

Yes CD's are a good investment. The reason why is they are guaranteed to return a pre-determined profit. If the amount invested is not over $100,000 it is FDIC insured. You cannot lose money. Warren Buffit has said the first law of making money is don't lose it. The second law is never forget the first law.
CD's being safe and guaranteed make them good investments but they are not necessarily the way to go. You want to be diversified and how much you have and how long you can invest your money before needing to draw upon it will more accurately dictate which kind of investments to make.
If you are unsure what to do, short term CD's is diffinitely the safe thing to do.

Inflation is 3%. On a 5% investment you are making 2% real money value a year. On a $100.00 investment your $5 becomes $2 value. After taxes (let's use 25% bracket) you have a net value of $1.5. That's a 1 1/2% profit.

The age old average for returns on stocks ( of course this is not guaranteed and 3/4 of mutual funds over the long haul don't make money) was 10%. This is now according to experts probably going to be closer to 8% annually. On the same $100.00 invested above that 8% becomes 5% after inflation. Your $8.00 return becomes $5.00. After 25% tax it becomes $3.75. Thats a 3 3/4% profit.

That's an extra 2 1/4% profit but your money was at risk of losing money as well. Your CD is guaranteed no matter what the market does.

For 2 1/4% some would take the sure thing. For others it would be unheard of.

robert w

CD's a good investment?
got a calculator?
CD's return on investment is say 5%.
inflation is say 4% 5 subtract 4 = 1.
1% after inflation subtract 25% tax =
0.75% return on investment.
is that OK for you?

Zachary S

It depends on a couple things:
1. Your tolerance for risk.
2. Your age.

But to give you an opinion, no they are not. The interest rate is not good enough. If you want an investment with no risk, buy U.S. treasury bonds. If you are young, I would really learn to invest in the stock market, as you can easily make a 10% return in a year vs. 2% in CDs.

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