Avoid These Common Pitfalls When Starting Your First Certificate of Deposit (CD) Investments as a Young Investor
Young Investor? Avoid These Mistakes When Starting Your First CDs
Many certificates of deposit (CDs) are currently paying high rates, making them an enticing option for young investors seeking a safe place to invest. However, there are common pitfalls to avoid, such as not shopping around for the best rate, paying early withdrawal fees, and ignoring the impact of inflation.
Mistake 1: Not shopping around for the best rate
Compare CD rates to maximize your returns and avoid ending up with a low APY CD. Spending a few minutes researching online can help you secure a better deal on your investment.
Mistake 2: Paying an early withdrawal fee
Choose a CD term that aligns with your financial goals to prevent incurring penalties for withdrawing your money early. Consider shorter terms if you're uncertain about locking your money away for an extended period.
Mistake 3: Ignoring the impact of inflation
Be mindful of inflation rates when choosing a CD APY to ensure your investments outpace inflation. Select a rate that significantly exceeds inflation to grow your wealth effectively.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.