A certificate of deposit (CD) is a popular savings instrument. Here, customers earn interest on a lump sum amount locked in for a fixed period. Unlike a regular savings account, the amount invested must remain untouched throughout the term. Failing to do so may invite penalty fees or result in a loss of interest. CDs offer a higher rate of return for the lost liquidity. Avoid these nine common mistakes when opening a CD.
Withdrawing the money too soon
CDs promise a higher rate of return due to the fixed lock-in period. Withdrawing money from an immature CD can be expensive, as lenders typically levy an early withdrawal penalty. The cost may vary from bank to bank. Many opt for liquid CDs, which do not incur a fee when you withdraw the principal amount early. However, these CDs offer lower interest rates and may not be as lucrative as regular ones.
Signing up for a very long term
CDs come in different lock-in periods, the most common being six months, twelve months, two years, and five years. The Federal Reserve meets several times yearly to review interest rates for different tenures based on the economic situation. Currently, the interest rates on long-term CDs are not as attractive as before. However, some experts believe the Fed might hike the rates soon, so holding back for a while would be wise. Instead of locking in $10,000 into a five-year CD today, you could diversify your investment, creating $1,000 CDs with shorter and staggered term lengths. As the CDs mature in the coming months, you can close them and open new ones for a better rate.
Not checking what different banks are paying
Many open CDs in a bank they already have an account with, which could be a mistake. You must shop around and check the rates of interest offered by other banks. Comparing will help you receive the best returns on your savings. Online banks usually offer higher interest rates on savings accounts and CDs than their brick-and-mortar counterparts.
Failing to diversify CD investments
The term “diversification” is often used when talking about investing. It refers to the practice of having a variety of investments, such as stocks, bonds, and CDs. Diversification helps reduce the loss in case one investment fails to perform. Interestingly, you can also diversify CDs or indulge in what is known as CD laddering. Here, you set up multiple CDs scheduled to mature at different times using a combination of short-term and long-term deposits. Staggering lets you access your funds regularly and provides an opportunity to upgrade to a higher interest rate.
Ignoring other high-return savings options
CDs are low-risk, low-return savings instruments. Investing all your money in them may reduce liquidity and stall earnings over the years. Additionally, money tied up in a CD does not grow at the same rate as the cost of goods and services. So, instead of focusing on a single investment option, consider several types to meet your financial goals. The ones you choose must align with your risk tolerance and liquidity requirements. People looking for higher long-term returns may find an IRA or a 401(k) rewarding. Those looking for better liquidity may find a high-interest savings account appealing.
Opening a CD instead of clearing high-interest debt
Consider your existing debts when planning investments. If the interest rate on your debts is higher than the interest rate of your CD, you may make losses. As a rule of thumb, pay off high-interest debts before making long-term investments with modest rates of return.
Letting the CD roll over
Once the lock-in period ends, do not let the CD roll over into a similar term at the same institution. Sure, it saves time and effort, but it fetches a lower rate of return. In some places, the CD may even turn into a regular savings account with lower rates of interest. Instead, begin to shop around as the CD nears its maturity date. Look into higher-yielding CDs and other investment options for the best possible returns.
Ignoring odd-term CDs
Some of the best CDs happen to have unconventional lock-in tenures. Often advertised as standout offerings for periods like 5-, 17-, or 21 months, these odd-term CDs can be gainful options. They may be offered to attract new customers, celebrate an anniversary at the bank or credit union, or for another reason. Keep your mind open to these unconventional options as they allow you to earn better rates of return.
Opening a fee-based account first
Many banks and credit unions may require you to open a checking account before setting up a CD. Ensure these accounts do not have overhead costs. Since the earnings on CDs are fairly modest, fees from checking accounts can significantly reduce your net profit.
Although CDs are a relatively safe and wise investment option, stay aware of these common mistakes and avoid them diligently. Doing so can help you receive the highest possible rates of return to maximize your savings. Research before investing and consult a financial expert if you need more clarification. Also, read the policy’s terms and conditions carefully to avoid misunderstandings.
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6 tips to avoid costly moving mistakes
Read moreMoving from one state to another or even from one locality to another can be a pretty hectic task. In such cases, you need an efficient moving company that can handle all the logistics and get your stuff moved safely. For this, it is important to know how to determine which packers and movers are best for the job.
Mentioned below are some tips that can help you pick the best moving companies from the lot:
- Looking from a logistical point of view, there are two types of packers and movers—interstate and intrastate. Interstate moving companies help people move from one state to another while intrastate company helps you move locally. If you are moving interstate, make sure that the moving company you choose is efficient for long distance or interstate moving. The professionals that you hire should also be able to help you legally as different states have different moving regulations.
- Make sure that the moving company you select is financially stable. Moving interstate can incur additional costs. Thus, select a franchise that can reach across multiple areas and are able to provide you with all the help if the worst should happen while moving interstate.
- Insurance is one of the important factors when it comes to packing and moving. Consult the Federal Motor Carrier Safety Administration to check if the moving company you are selecting has all the insurance and licenses in place. The average Bodily Injury and Property Damage (BIPD) insurance of a moving company should be at least around $750,000.
- The moving company that you select should have trucks of all sizes and the right equipment to handle the packing and moving. Look for equipment like ramps, jacks, lifts, hand-trucks, appliance dollies, and so on. They should also provide you with boxes for packing.
- Background checks are also important when it comes to selecting moving companies. Select those packers and movers that are reputed and have helped numerous customers with their moving needs. Make sure these moving companies hire professionals only after running a background check on them. Efficient moving companies will have a strong training regimen in place for their employees. Make sure their employees are trained for things like truck loading and unloading techniques, proper lifting techniques, and handling fragile and valuable items.
- Once you have shortlisted a couple of moving companies, ask around and look for reviews posted by people who have used their services on the Internet. Websites like consumerreports, bbb, and movingscam can offer you reliable information on the best packers and movers.
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Know all about pulmonary embolisms
Read morePulmonary embolism is a condition which happens suddenly and is often life threatening if not attended to. It occurs when blood clots, most commonly, air bubbles lumps of fat from the marrow of long fractured bones or amniotic fluid. This blocks blood supply to areas that are provided by the artery and leads to the death of lung tissue. This is called a pulmonary infarct and is irreversible. Depending on the area that is involved the lung capacity may be drastically reduced.
Blood clots are, generally migrated from legs where these are usually formed. Blood generally does not clot in the body. However, when the circulation becomes very slow and stagnant, they may get formed. There are other factors too that are involved. Pulmonary embolism generally presents the symptoms like shortness of breath and chest pain aggravated by exertion but not relieved by rest, bluishness of lips and skin, cyanosis, cough with blood or blood streaked sputum and dizziness. Other symptoms are rapid or irregular heart rate and copious sweating. In severe cases, the patient may lose consciousness or have a swollen and painful leg.
The general approach to treatment is to dissolve the clot and establish blood circulation. Towards this, anti coagulants like heparin are given. With some overlapping oral anti coagulants are also given. While these medicines would prevent further clot formation the body would dissolve the clot. Modern anti coagulants are fast acting and possibly avoid usage of heparin.
Standard body mechanisms will not allow blood to coagulate when in circulation. However, stagnating circulation especially in the legs and the condition of the lining of the veins and certain deficiencies in the blood would allow coagulation to happen. Long flights like, transatlantic in crowded seating arrangements should slow down the circulation the lower extremities to stagnation encouraging clot formation. Similarly, long bread rest as in certain fractures, heart attacks and major surgeries like knee replacements are other situations that promote coagulation of blood within the body.
It is important that general public is aware of symptoms and consequences of pulmonary embolism so that symptoms are recognized for what they are and getting medical attention in time to avoid a catastrophe.