Real estate, word of the day, certificate of deposit or. So what we’re going to do first is define the word, then we’re going to use it in a sentence and then I’m going to briefly discuss it. Certificate of Deposit is a time deposit held at a financial institution which pays a certain amount of interest to the depositor. OK, and it’s also known as a CD or certificate of deposit. Use it in a sentence.
A CD typically receives a guaranteed rate of return, but it’s typically small and secure. All right, and then to discuss it, a CD is a safe way that you can have access to money. You can often laterite to achieve higher returns during normal interest rate times. What does that mean? So to layer a CD, they have a certain time frame in which they’re good for.
So as CDs, you would probably get paid more during typical times again, if you have the money in the bank for a longer period of time. So, for example, if you wanted money to be available to you on a quarterly basis, you could set up and have four yearly CDs that you time deposit at different times. So you have them coming mature each business quarter.
You would have four of them, but you would invest them for a full year every three months and you’d continue to do this to laterite out until the time in which you actually have four one year CDs that are due on an annual basis, but they become mature due or payable to you each business quarter. In this example, you would receive a higher rate of deposit for having them in for one year versus a quarter.
But you would still have the control that they’re each coming to on a quarterly basis. You can do the same exact thing with longer time frames like years or decades, and receive higher rates of return. This is typically known as a very, very, very secure way to invest your money. And it would be much more secure than stocks or other items that you could make as investments and set.
