{"id":233001,"date":"2016-11-08T13:52:52","date_gmt":"2016-11-08T20:52:52","guid":{"rendered":"http:\/\/getrichslowly.org\/blog\/?p=233001"},"modified":"2019-12-01T23:06:02","modified_gmt":"2019-12-02T07:06:02","slug":"market-linked-cds","status":"publish","type":"post","link":"https:\/\/www.getrichslowly.org\/market-linked-cds\/","title":{"rendered":"Market-linked CDs explained"},"content":{"rendered":"
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Many people have heard of CDs — certificates of deposit. But not many will say the same for market linked CDs, also known as equity CDs or market or indexed CDs.<\/p>\n
Though they’ve been around since the 1980s, renewed interest in market-linked CDs is a product of our current interest rate environment.<\/p>\n
Interest rates are low. Really low. So it’s understandable that people are looking for some risk-free or lower risk ways to earn the consumer price index (CPI) rate on their savings. They’re not asking for double-digit yields, just a measly 1.5 to 2 percent.<\/p>\n
Traditional deposit accounts, like savings and money markets, can’t do that and certificates of deposit (CDs) also offer very low interest rates. When people hear CD, they think safety. But market-linked CD may surprise some in that it carries various risks and can actually reduce your principal.<\/p>\n
Traditional bank CD offerings may not offer a lot of yield, but your principal is safe. The market-linked CD is different. Even the Federal Deposit Insurance Corp. has warned<\/a> consumers about them in the past.<\/p>\n Here’s why:<\/p>\n Six potential risks can be associated with market-linked CDs. They include:<\/p>\n Despite these risks, market-linked CDs are still potential options for people who seek a little more return than is possible with traditional CDs and deposit accounts. Consult with a financial advisor and tax professional about these risks and other nuances involving market-linked CDs.<\/p>\n No matter what path you choose, take heed this very specific warning from the FDIC:<\/p>\n \u201cIf you are confused about the terms and conditions offered under the product and you are unclear or uncomfortable about the risks you are assuming, a conventional CD might be better for you.\u201d<\/p>\n To learn more about conventional CDs, here are some of our more popular posts:<\/p>\n <\/p>\n Many people have heard of CDs — certificates of deposit. But not many will say the same for market linked CDs, also known as equity CDs or market or indexed CDs.<\/p>\n Though they’ve been around since the 1980s, renewed interest in market-linked CDs is a product of our current interest rate environment.<\/p>\n","protected":false},"author":3253,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[491],"acf":[],"_links":{"self":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/posts\/233001"}],"collection":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/users\/3253"}],"replies":[{"embeddable":true,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/comments?post=233001"}],"version-history":[{"count":0,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/posts\/233001\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/media?parent=233001"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/categories?post=233001"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Risks With Market-Linked CDs<\/h2>\n
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