Diversify Cash With CDs

How diversified is your cash?

CDs, or certificates of deposit, are cash investments that lock into an interest rate for a certain length of time. They work for savings and are not intended for emergencies or retirement. CDs can’t be accessed quickly without a penalty and typically can’t keep up with inflation. They’re good for specific savings goals: like the down payment on a house, or the purchase of a vehicle. If you’re concerned about declining interest rates for your deposits, diversify with CDs. Ladder several to take advantage of the current annual percentage yield. That’s a strategy in which you spread cash over multiple term lengths. The benefit is having access to short-term CDs that mature on different dates. Plus, it grants flexibility in deciding whether to reinvest at maturity.

It’s wise to diversify and to always manage money with diligence. In Ecclesiastes 11:2, King Solomon said, “Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.” In Proverbs 21:5, he said, “The plans of the diligent lead to profit as surely as haste leads to poverty.” Now, you can’t access the money like a savings or checking account. So you first need a healthy emergency fund. Consider any expenditures you might face in the near future. Federally-insured CDs are a secure place to park money. Their guaranteed rate of return earns higher rates than savings accounts. If rates drop, the CD will continue to earn the initial rate.

And if credit card debt is keeping you from opening a CD, let Christian Credit Counselors help. They’ll create a debt management plan that works. For more information just call the Crown Helpline: 800-722-1976 or visit online at crown.org/ccc.