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Resons Not To Invest Into Bank CDs

By Shaun Rosenberg

I see it all the time, ads saying things like, “invest into our CD and make 2% a year”. Honestly most CDs just seem like a waste of time to me. They seem more like something that will prevent you from reaching your financial goals.

CDs and other ways to safely invest your money with “no risk” seem like a bad idea for 3 reasons.

1. They Don’t Even Match Inflation

The thing I don’t get is why would somebody want to invest their money into an account that will guarantee them a 2% annual return when inflation is at 3-4%?

This is kind of like putting your money into a pocket with a hole in it. Your money will increase over time because you keep putting more into your pocket. But it is gradually going away because some of it just falls out of your pocket through the whole. In other words you would have been better off just keeping your money in your hand, or better yet wallet.

Just to break even you need to be making at least 3% a year, and if you count taxes it’s even higher.

2. Banks Take Your Money and Invest It

Banks invest that money into stocks and other assets that make them more money. In short whenever you put your money into a bank they take it and start investing it. Out of the profits they pay you a few pennies to keep you happy. And people think this is a good deal.

3. There are Better Investments Out There

There are just so many better investments out there. For instance the average stock market return in 10% a year over the long term. Try getting a 10% return at a bank and you’ll get kicked out. Honestly with all the investment options out there anything that doesn’t make you at least a 2 digit return isn’t worth the time. At least in my opinion.

For more information about the stock market visit Shaun’s site which teaches strategies about investing intostocks

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Article Citation
MLA Style Citation:
Rosenberg, Shaun "Resons Not To Invest Into Bank CDs." Resons Not To Invest Into Bank CDs. 1 Jul. 2010. uberarticles.com. 3 Aug 2014 <http://uberarticles.com/finance/stocks-mutual-funds/resons-not-to-invest-into-bank-cds/>.

APA Style Citation:
Rosenberg, S (2010, July 1). Resons Not To Invest Into Bank CDs. Retrieved August 3, 2014, from http://uberarticles.com/finance/stocks-mutual-funds/resons-not-to-invest-into-bank-cds/

Chicago Style Citation:
Rosenberg, Shaun "Resons Not To Invest Into Bank CDs" uberarticles.com. http://uberarticles.com/finance/stocks-mutual-funds/resons-not-to-invest-into-bank-cds/


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