When I talk to people about investing, whether it's for retirement or just general savings, I get all kinds of reactions. Some people get excited just thinking about their financial accomplishments and the steps they've taken toward building a beautiful retirement. Others feel anxious and don't have any idea where to start.
For people new to investing, certificates are a great option. They may not be quite as sexy as stocks and bonds, but they provide an excellent opportunity to learn about investing without any risk. A certificate—also known as time deposit, term deposit and CD—is a federally insured savings account that has a fixed dividend rate and a fixed date of withdrawal.
There are many different types of certificates—don’t worry, it’s easy to find the right one for you.
Certificate
With a traditional certificate account, you make a one-time deposit for a specific term at a fixed dividend rate. This account is great if you know you'll be able to commit for the entire duration of the term. Otherwise, you may be charged a penalty for early withdrawal.
Growth certificate
While most certificate accounts only allow for an initial deposit, a growth certificate lets you make multiple deposits over the length of the term, giving you added flexibility. Check the terms of the agreement when you open an account as some financial institutions limit the number of deposits you can make.
Holiday certificate
This certificate account can help yousave for the holiday season year-round. Add a little—or a lot—throughout the year and, by the time Christmas rolls around, you've got the money set aside for shopping. Most financial institutions will let you open a holiday account with as little as $5.
Youth certificate
Want a great way to introduce your child to saving? A youth certificate account can help them learn to set and reach financial goals. Utilize this tool to help your kids understand how finances work. They’ll get a head start on learning the importance of investing and saving as they watch their money grow.
If you're concerned about the unpredictability of the stock market, or are new to investing, certificates can be a safer option. Remember to consider your overall financial goals and needs. If you’re looking for extra guidance, make an appointment with a financial advisor to get started.