How to Invest Money in CDs

Investing in CDs is lower risk than other investments.

Investing in CDs is lower risk than other investments.

Getting hitched means you'll also face financial decisions together, such as how to invest your money. CDs, or certificates of deposit, are a relatively low-risk option if you're not ready to take your chances on higher-risk investments. A CD usually has a higher interest rate than a regular savings account, but you also commit your money for a set amount of time or risk a financial penalty. CD terms vary from 6 months to 5 years, sometimes more.

Write down your financial goals as a couple. Consider your current financial situation and what you want to get out of investments. Keep these goals in mind when considering the terms and options for CDs.

Calculate the amount of money you have available to invest in a CD. Keep in mind that your money will be committed for the length of the CD's term so don't invest more than you can comfortably live without for that period.

Discuss how long you want to keep the money invested in the CD. If you aren't comfortable with waiting several years to gain access to your investment, choose a shorter term. A longer term usually means higher interest.

Talk about choosing a fixed interest rate versus a variable interest rate. If you choose a variable-rate CD, make sure you understand when and how changes in the rate will be calculated.

Contact several banks in your area to determine their CD rates for the term length you want. Shopping around to different banks could earn you a higher rate.

Ask about all of the details of the CDs. The U.S. Securities and Exchange Commission recommends getting the CD maturity rate in writing. Determine when and how interest is paid for the CD and the financial penalties for withdrawing your money early.

Look at all of the details of the CD options available. Compare the CDs with your financial goals and current financial situation. Then choose to invest in the CD that best matches your needs.

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