Should I Open a CD Right Now or Wait According to the Fed?

[Olde Hornet]

MSN

Is Now a Good Time To Open a CD?​

In July 2023, the Federal Open Market Committee raised the federal funds rate to a range between 5.25% to 5.50%. Rate rises may occur once more before the end of 2023 according to Fed Chairman Jerome Powell. In this tumultuous time of bank failures and booming inflation, a low-risk investment such as CD seems like a safe bet. As the Fed is predicting another 0.50% rate hike, this could mean it will be a good time to open a CD.

Here are some other key takeaways about investing in CDs now:

• Many of the best CDs available pay higher interest rates than high-yield savings or money market accounts.
• If you put any money into a CD, you should be comfortable with not having access to it until the term length has reached maturity for the agreed upon fixed period of time.
• Though considered by experts a safe or conservative investment with a guaranteed rate of return, there is often less payout than with riskier investments such as stocks or bonds.
• If you invested $10,000 in a 1-year CD at the national average rate of 1.72% APY, you would have earned $172 giving you a total of $10,172 at the end of 12 months.

 

[Fiyah]

I would rather go with a High Yield Savings account as you have access to the funds in case of a emergency or some other need without being penalized if you did it with a CD.