The safe and secured investment instruments
One of the most popular types of investment tool is the certificate of deposit – CD. An increasing number of institutions are now offering various types of CDs with a variety of options to choose from. Let’s have a look at the extreme ends of the entire spectrum of CDs.
In the traditional option, the investor deposits a certain amount of money for a fixed period of time. He receives a pre-decided rate on interest on those deposits. At the end of the tenure of the investment, the investor can choose to take the money home or renew the CD for another fixed period of time. Any pre mature withdrawal results in penalties being imposed on the CD receipts of the investor. The credit union CD rates are for Traditional kind of CD is the highest among all of its variants.
On the other end of the spectrum in the Liquid CD
If the traditional CD raises questions in your mind with respect to the liquidity of the instrument, the financial institutions have devised the Liquid CD.
It works much like a savings account. The liquid certificate of deposit gives the investor the facility of withdrawing funds without any penalties being imposed on the receipts. The rate of interest would be lower than that of the Traditional CD because of the facility of liquidity that is being offered.
In both the instruments the rate of interest in higher than the money market instruments.
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Posted by admin on January 8th, 2008 filed in Finance & Investment
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