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Certificate of Deposit (CD)
Term category: General Investing
In 10 words or less: A bank investment that pays the CD holder a set interest rate for a fixed amount of time.

Definition: This is much like a bond from a bank because you give a bank money for a specified amount of time and they agree to pay you back at that time, plus interest. The length of a CD usually varies from one month to five years.

StockJargon Advice: If you have a lot of money in the bank, CD's allow you to put that money to work for you. They're also nearly risk-free investments. However, their interest rates vary with the current market interest rates. At times, you may receive a very, very low interest rate.

We recommend that if you' have a lot of money to consider investing it in another investment such as stocks and bonds instead.

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Related Books

Wall Street Journal Guide to Understanding Money and Investments by Kenneth M. Morris
The Bond Book by Annette Thau
How the Bond Market Works by Robert Zipf
Beating the Dow with Bonds By Michael B. O'Higgins

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