Lux Investing
CD or High Yield Savings?
I am saving money to purchase a house after I finish graduate school. I am currently 22 and plan to invest for between 8-10 years depositing in 1000 month during that time period. Would it be best to deposit the amounts solely into a high interest savings account, a CD, or both. I'm well versed in High interest savings accounts but I'm still a little confused with the purpose of CD's besides not being a great option for long term investing. Would my plan be considered long term? More info on a viable route would be much appreciated. Thanks and Merry Christmas!
Public Comments
- CDs usually have higher interest rates but if you need one that you will be able to put money into every month the rate will probably be very low. I would stick with a high interest savings or maybe a money market savings account. Since you really need this money within less than 10 years, the stock market is probably not the best idea since you don't want to risk it.
- CDs are for the truly risk adverse. The interest rate your bank is going to pay on HYS is incredibly low right now--less than 1% and probably going to stay that way for at least a year. A CD right now is paying 2.5% to 4%. The typical CD is for 1 year or more. You could lock up the money for a year and revisit the interest rates then.
- Go with the CD. You will make much more money on the interest over a high yield savings.
- First stick with a bank with FDIC insurance for your savings. The risk is to high and the extra reward to low to invest else where in other CD's. Second keep your certificates is short term certificates. Interest rates can not go much lower than they are right now with the feds rate near 0%. Then the question is which pay more right now. If rates go up a short term CD will come due soon and you can reinvest at the higher rate. The savings account can be invested in a higher yielding CD at any time. Forecast for when rates will go up or down on a short term basis are very unreliable. So how soon to jump from one to another is all guess work.
- CD is better option for high returns
- Washington mutual has 4% savings account!! you can take money out any time and still have a higher interest rate than many other cds. i have had it for a while now and highly recommend it
