Who doesn’t love an exciting new meme stock or the latest crypto craze? We’ll tell you who: the folks who end up losing a lot of money. Sure, you could make money as well—but there are no guarantees. And that’s the point: if you’d like to grow your savings, while keeping every dollar safe, there’s an alternative. It’s so safe, it’s insured by the federal government. It pays a predictable return. And it’s tried and true, helping Americans growth their wealth since the early 1800s.
We’re talking about certificates of deposit, or CDs. If you’re starting to yawn, know this: the richest people in the world use them to get even richer. These people are attracted to the safety and certainty that CDs make money while protecting their wealth. What’s good for them can be good for you.
All you need to do is follow 5 simple rules of thumb.
#1: Hedge your risk. 👍🏽
Don’t get us wrong: we’re not saying don’t ever invest in stocks. The potential for higher returns can be an excellent way to help you build wealth over time. But always remember that stocks can be volatile and lose money in the short term. In 2022, the S&P 500 index—a broad measure of stock market performance—declined nearly 20%.
Investing at least part of your funds in CDs can help offset this risk, which can be especially important in a down stock market (it’s called “diversification,” a critically important component of financial planning).
CD deposits are federally insured up to $250,000 per account holder at our bank. Plus, we can insure your deposits for even more via our CDARS network (Certificate of Deposit Account Registry Service).
#2: Dream big, save now.👍🏽
Whether you’re just starting out or have been working a few years, you have financial goals. And having enough money in the bank can help you achieve them. Ready to start a family? Buy your first house—or move up to a bigger one? Need a new car? Want to build a rainy-day fund? Is it finally time to start saving for the vacation you’ve always wanted? A CD can help you plan ahead to achieve whatever your financial goals are.
CDs can also help you practice good financial discipline. If you want to save more money—but are having a hard time doing it consistently—CDs can be a big help. You’ll pay a penalty for withdrawing funds before the CD matures to its full term. (For example, if your CD has 13-month term, you can’t withdraw funds until the 13 months have expired, unless you’re willing to pay a penalty for early withdrawal.) If you’re prone to impulse buying, a CD can help you become a more disciplined money manager.
You can even open multiple CDs at the same time, with different maturity dates, so you can time when funds will be available to meet your financial goals. Learn more about building a CD ladder.
#3: Save smart, earn more.👍🏽
When you’re just starting out, a traditional savings account is a great way to start accumulating cash for whatever your goals might be. Once you’ve been working for a while and have more money to save, you can make that money work even harder. A CD typically pays higher interest than a savings account, in exchange for agreeing to leave your money deposited for the term of the CD, which can range from a few months to several years.
Just how much money will you earn? That depends on the interest rate, annual percentage yield (APY) and how much you deposit. Try this easy-to-use calculator to find out exactly how much you’ll take home when the CD matures.
Now get ready to earn a high, predictable CD return…
#4: Choose the right CD.👍🏽
CD rates are different based on the balance and term you choose. You want the highest rate, right? Not always! You'll want to balance the advantages of the rate with the term of the CD. Your CD rate is guaranteed as long as you let your CD mature to its full term and don’t make an early withdrawal. Your funds will be insured by the FDIC (Federal Deposit Insurance Corporation), up to $250,000. And you won’t have the rollercoaster ride of the stock and crypto markets. You’ll sleep well at night, while your money grows.#5: Choose the right bank.👍🏽
Paying competitive, predictable CD rates is our job, as a local bank dedicated to helping our community thrive. We encourage people just like you to deposit your savings with us. Then, we loan those dollars to neighbors in our community. That helps local families and businesses meet their goals, while you meet yours. When we help you grow your savings, you’re helping your neighbors grow as well!
So come grow with us. It’s just one more way we’re Banking. For You.