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Are CDs good investments?

Jan 09, 2012 by David from Sioux Falls, SD in  |  Flag
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7 votes

CD'S are not investments, they are short term cash equivilents and should only be used if you have a precise need for your funds in the very near future.

2 Comments   |  Flag   |  Jan 09, 2012 from Port Washington, NY

Thanks Evan. Recent market turmoil piqued my interest in this question, and CDs appealed to me to their known-interest nature. Are there alternative investments and/or investment strategies that you would suggest?

Flag |  Jan 10, 2012 near Sioux Falls, SD
Evan M. Levine, ChFC

Hi David, it depends...your investments should be aligned with your goals, that is what you are investing for. If a goal is short term, say less than 3 years out or less ( A down-payment on a house for example) CD'S or Ultra short bonds are the appropriate vehicle. There aren't many alternatives. Unfortunately the rates on these investments are peanuts these days... but we have to live with it. If you start seeking higher returns, you will assume correspondingly higher risk. Thanks and please don't kill the messenger!

Flag |  Jan 10, 2012 near Port Washington, NY

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NO! If your time horizon is anything more than ultra short-term, you will likely find that you lose purchasing power with a CD due to inflation. There are better alternatives.

Comment   |  Flag   |  Jan 12, 2012 from Arvada, CO

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