Everybody loves financial gains. At the same time, we also despise incurring losses. However, the reality is that it’s often difficult to tread the line between gaining and losing on our investments. Because of this challenge, many of us turn to low-risk investments to have some assurance and peace of mind that we won’t lose much on the value of our initial investment. Even if the returns are low, at the very least, we won’t have to deal with quick and huge losses, which often have severe repercussions on our investment attitude and financial position.
One of the most common low-risk investments that people invest in is a certificate of deposit (CD). We highly recommend CIT bank if you are keen to get started on a CD investment. CIT bank CD rates are some of the highest on the market and feature no or minimal penalties for early withdrawals. In this article, we will share with you some strategies on how to manage your CD.
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Reinvest maturing CDs
Maturing CDs pertain to those CDs that are nearing their end date as stipulated in the CD agreement. Essentially, when your CD has already matured, you are now granted the right of control over the investment, along with any accumulated interest, without having to pay for fees or charges. You could, for one, cash out your investment. You may already have specific plans as to what you want to spend that money on, or you may need the funds for whatever reason. But, instead of cashing out, we highly recommend that you reinvest these funds. If you do want to reinvest your funds, you have two options: 1) reinvest in a new CD or 2) choose another type of investment.
The first option is relatively simple. You just have to browse and shop around for those CDs with higher rates and then get into an agreement for whatever period you want your CD to last. The second option is a bit more complicated. You would have to make an assessment as to your current risk appetite, your financial position, your investment period and horizon, as well as other relevant investment factors. No matter what investment option you choose, it’s very important that you do extensive research first just to make sure that you have some idea as to what you’re getting into.
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Ladder your CDs
One way to maximize your CD urdughr investment is to diversify your CD portfolio through “laddering.” This investment technique involves investing in CDs with different maturity dates. For example, you could invest in CDs with maturity dates of 6 months, nine months, one year, three years, and five years. This is considered to be a superior technique as opposed to putting all your eggs into one basket, such as when investing solely in a 5-year CD. Laddering your CDs will give you access to short-term funds while still being able to take advantage of interest returns with long-term investments.
- Constantly monitor CD rates.
CD rates vary across different banks and over certain time periods. As such, it’s always a good idea to stay updated as to trends when it comes to CD rates. In some cases, it may be wiser to pull out your investment and transfer those to another CD at a higher rate. Even if you have to pay for early withdrawal charges and fees, it could be that the gains you are able to make by transferring your investment will offset the amounts that you are required to pay. However, this is not the case with each and every investment. Therefore, it’s still a matter of financial judgment and making the right financial decisions. Again, this entails having to use financial tools, talking to financial advisors, doing research, and of course, reevaluating your risk appetite.