Understanding Certificate Of Deposit Better
If you are confused between CDs and Money Market then there are few factors to consider :
- Time of Deposit: This is about planning your need for part or full cash requirements. Since there is no liquidity in CDs, one must plan about the length of the deposit. For example, it can be one deposit $25000 over 5 years or 5 deposits $5000 with returns in the 1 st year, 2 nd year etc. This is called Ladder CDs. In the case, money markets the fund is available to you without any fuss as there is flexibility with the fund, unless extreme cases.
Both are useful financial tools, however, a person with capital might afford to put in money markets whereas people who want to lock away their savings could choose CDs. CDs are a safer option with lower returns while money market has risks with higher returns.
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