High Yield FDIC Insured CDs
Most investors have "core capital"—money
that they wish to preserve and keep in a safe place. CDs
are a good place for those funds. Since you plan to keep
that money permanently, why not park it for a high rate? You
can get long term CDs that pay much more than your local bank.
Before you pile all your money in the truck
to take advantage of the higher rates, these high paying CDs do
have some tradeoffs, so please read on.
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These are long-term CDs. Buy them
and forget them. You can get your interest semiannually,
but the CD has a 15-year term. So, this CD may outlive
you. However, if you’re a smart investor, you
want your money to outlive you (the consequences of you outliving
your money, let’s not even discuss). At your death,
your heirs have the option of "putting" (placing
for redemption) the CD at face value, even if the term has
not expired.
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These CDs have a call feature, which
means the bank can decide to pay you back early. These
are often named "callable CDs."
In the case of the CDs identified in the footnote, the bank
has the option to pay you back early (after 1 year) or at
any 6-month interval after the first year.
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The CD has a step rate feature.
If the bank does not call the CD after the first year, the
interest rate may be stepped down for the remaining term
(you will know this before you invest).
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You have the option to sell your CD at
any time in the secondary market, however, you could get less
than you paid and there is no assurance of a buyer for your
CD.
So who are these CDs for? For people
who want to put their money in the safest place (FDIC insured),
who want a very high rate and who do not need access to the funds. These
investors will have other funds set aside for liquidity needs
and will have adequate medical and long term
care insurance so that these funds can be left to earn a very
high rate.
Rates change daily. Request Your Free
Guide
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