- I started investing a lot of my savings in CDs this year when I saw how high APYs are right now.
- I asked the experts how I could improve my strategy and learned I shouldn’t stick to just a couple banks.
- I also learned it’s not worth the risk to keep my emergency fund in a CD and risk paying a penalty.
At the start of the year, I decided that I wanted to take some of my money out of the stock market and put it into short-term and risk-free investments instead.
During that time, I noticed that CDs were offering high interest rates. I wanted to capitalize on the ability to earn a guaranteed 4% to 5% on my money in 12 months. That’s why I made a move to put a big percentage of my assets into CDs with varying terms and interest.
In order to make sure I’m getting the most out of my CD strategy when average CD rates are high, I decided to chat with two financial advisors to hear their best tips.
1. Keep an eye on CD rates
I like to take a very simplistic approach with my finances. Whenever I decide to put money in a new CD, I usually look at the latest offerings from the two financial institutions I have checking and savings accounts with. If one of them seems like it’s offering a CD with higher than usual APY, I end my search there and open up a CD with that company.
However, certified financial planner Taylor Kovar recommended that I try a different approach.
“CD rates can vary wildly between banks, credit unions, and investment firms, so be sure to shop around whenever you are ready to buy one,” he said.
Rather than just go with the CD rates my current banks are offering, I can start doing more research to keep a pulse on other rates. For example, if I put $50,000 in a CD earning 3% APY at my bank instead of one earning 5% APY from another bank, I could lose out on earning an additional $1,000 that year.
“That 15 minutes of research could mean a big difference…
Read the full article here
