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).
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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.
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 With a savings account there are minimal restrictions on in-branch withdrawals; however, with a CD the funds can’t be withdrawn without penalty until the maturity date.
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.
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.
Here are some of the most popular reasons people choose to open a certificate:
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.