In the financial world, stocks and stock-based mutual funds often get a lot of attention. And deservedly so, because they often form the core of a portfolio. But to help achieve your goals, you may also want to consider a broader array of investments — one of which may be a certificate of deposit (CD).
As you may know, a CD earns interest on a lump sum for a designated period. You can purchase CDs whose maturities range from a few months to 10 or more years. Generally, the longer-term the CD, the higher the interest rate, although this isn’t always the case.
In recent years, CD rates have been pretty low, reflecting the overall interest- rate environment. But now, as the Federal Reserve has repeatedly raised interest rates to combat inflation, CD rates are rising, too. In fact, one-year CDs can currently be found paying in the 5% range — a rate that hasn’t been seen in more than 15 years. Later in 2023, though, if the Fed eases up on rate hikes, or perhaps even starts reversing them, CD rates could fall again.
