Travel and Leisure Travel and Leisure

4 Signs You Should Skip CDs Despite the 4% Rates


Published on 2025-02-04 10:21:14 - MSN
  Print publication without navigation

  • CDs are a useful financial tool to lock in a set return -- but they're not for everyone. Learn if CDs are right for you and how to make the most of your money.

The article from MSN Money discusses four reasons why investors might want to reconsider putting their money into Certificates of Deposit (CDs) despite the attractive 4% interest rates. Firstly, CDs offer low liquidity, meaning funds are locked in for a fixed term, which can be problematic if you need access to your money sooner. Secondly, the returns from CDs might not keep pace with inflation, especially if inflation rates rise, effectively reducing the real value of the money saved. Thirdly, the article points out that there are potentially better investment options available, like stocks or bonds, which could offer higher returns over time, albeit with higher risk. Lastly, the tax implications of CD earnings can be less favorable compared to other investment vehicles, as the interest income from CDs is taxed as ordinary income, which could be at a higher rate than long-term capital gains from other investments. The piece suggests that while CDs provide safety and predictability, these factors might not outweigh the benefits of more dynamic investment choices for some investors.

Read the Full MSN Article at:
[ https://www.msn.com/en-us/money/investment/4-signs-you-should-skip-cds-despite-the-4-rates/ar-AA1ynJot ]