Eli5 how do investment cds work
In: 7
You give the bank your money for a fixed period of time, trading flexible access to your funds for a higher interest rate. If you give them a lot of money for a long time, you’ll get a pretty good rate of return.
The downside is that CD rates are pegged to the Federal Reserve’s interest rate. So if you lock in your rate and then the Fed raises rates, you’re out of luck. But if you get a CD and the Fed then cuts rates, lucky you. Rates keep going up so don’t go getting a CD just yet unless it’s one that won’t mature for a few years.
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