1. Thanks for a very informative article about CDs. I do have some CDs and have felt a little embarrassed because of the low interest rate, so your article made me feel much wiser and strategic! 🙂 I’m a conservative investor and I appreciate the peace of mind with the FDIC insurance.
    Eliza @ Happy Simple Living recently posted…Win a Signed Copy of My New Book, “The Quinoa Quookbook”My Profile

    • Hi Eliza – Nearly every investment vehicle has it’s time, and since we never know when that time will be, it’s best to have at least some money spread across the options. CDs will shine at some point, as they have in the past. Smart investing isn’t so much knowing when the next market turn will hit, but being positioned to take advantage when it does.
      Kevin Mercadante recently posted…Consumption is a Poor InvestmentMy Profile

  2. We’ve got a year’s worth of expenses in CDs that make up our emergency fund. They are 5-year CDs at Ally Bank paying 2% annual rate. They only have a 60-day interest penalty for early withdrawal. Ally has recently increased the penalty for any new 5-year CDs. We don’t have any CDs as part of our investment portfolio. We are mostly invested in Total US Stock Market, Total International Stock Market, and Total Bond Market. We also have a large holding of i-bonds, and continue to purchase the maximum allowed each year. New issues don’t currently pay much, but they are guaranteed to stay ahead of inflation.
    Bryce @ Save and Conquer recently posted…DIY Home MaintenanceMy Profile

  3. Great point about the psychological impact CD’s being a separate type of account. The emotional and behavior impact of things like that are often overlooked.

    Nice comparison of CDs and Money Market accounts. I’ll definitely be keeping an eye on CD rates more as interest rates rise over time.

  4. You make some good points about having a CD. I don’t have any actually and use a high yield online savings account instead. For now it works for me and I try to be careful about my money. Maybe in the future one day!
    Christine @ ThePursuitofGreen recently posted…Rain, rain go away, come back another dayMy Profile

  5. This is a great list. I do have our emergency fund savings in CDs, but all my higher interest ones expired a while back so we are only getting about 1%. 🙁 I absolutely agree that there is a place for CDs in the way you describe, since we all should be holding some cash reserves for an emergency fund at least. Also, as you point out, a good place to hold cash while waiting to enter into the market.

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