How to Diversify Your Savings Portfolio with a CD

Dec 19, 2023

Did you know that your savings portfolio should be diversified just like your investments? Financial experts recommend giving your savings as much chance as growth as possible. Let’s take a look at an especially great choice for diversifying your savings: a certificate of deposit (CD).

Accelerate your financial goals with an Arizona Financial High-Yield Certificate of Deposit. Choose from a variety of rates and terms. Insured by NCUA.

What is a CD?

A certificate of deposit is an insured savings account with a fixed dividend rate and a fixed date of maturity. The funds in these accounts will grow at a dividend rate that is usually higher than those on typical savings accounts and some money market accounts. 

How is a CD different from a savings account?

There are several differences between a CD and a savings account, but the main one is the accessibility. With a savings account there are minimal restrictions on in-branch withdrawals; however, with a CD the funds can’t be withdrawn without penalty until the maturity date. 

Terms & conditions of CDs

Some basic requirements to open a CD typically include having a minimum opening balance and commitment to keeping your money in the account for a set amount of time. Certificate term lengths also vary among financial institutions, with most offering a choice of terms ranging from three months to five years. 

Is a CD for everyone?

While keeping your savings in a CD can be an excellent way to diversify your savings (and earn more than a basic savings), it’s not for everyone. Only go ahead with your decision to open a CD if you are fairly certain you will not need to access these funds before the maturity date. 

What are the advantages of diversifying your savings through a CD?

Here are some of the most popular reasons people choose to open a certificate:

  1. Low risk. Your deposits are insured by the National Credit Union Administration up to at least  $250,000. You can rest easy knowing your money is safe.
  2. Higher dividend rates. Certificates offer all the security of savings accounts, but with higher yields.
  3. Locked-in rates. The APY of your certificate is set when you open it and is locked in until its maturity date.

If a CD sounds like the perfect choice for you, visit Arizona Financial today to learn more. We’re committed to giving your money its best chance at growth.