Looking for ways to recoup your losses from your undiversified portfolio? With stocks on the rise again, you might want to take a look at stock-related investments. But if you’re afraid to get burnt especially since even the government can’t assure a definite rebound any time in the future, you might want to consider market-indexed CDs.
Investors who are looking for “safe” investments are now taking advantage of indexed CDs especially now that stocks are on the rise again. It’s main difference from regular certificates of deposits is that indexed CDs are linked to financial indexes.
If the index rises, you earn as well. It’s main attraction though, is that if the index falls, you still get your original deposit. Regular CDs just let you earn a preset interest rate for your chosen term. However, like regular CDs, your money is covered by the FDIC.
Still, while this sounds too good to be true, there are some points that investors should take note of. For one, index CDs keep your money for the length of the term. Regular CDs allow you to take your money out any time in exchange of penalties to be deducted from your interests.
Despite these limitations, indexed CDs give investors the confidence to use their money without being subjected to the usual fears of investing in stocks since someone else absorbs the risks.
Source: WSJ
