CHAPTER 2
Certificates of Deposit— Old Faithful 쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆쏆
“It may not seem as exciting as trading in pork bellies, but it always brings home the bacon.”
Do I Need to Read This Chapter? • How much of my certificate of deposit (CD) investments is federally insured? • How can I get around the $100,000 insurance limit? • Are CDs too safe? • When do CDs make sense? • What are the different ways my interest can be compounded? • How can I shop for the best deal on a CD? t one time, you needed $100,000 or more to invest in a bank certificate of deposit. This restriction had been established by the Federal Reserve Board in order to protect savings banks, savings and loan institutions, and credit unions from competition with commercial banks. The fear was that if commercial banks could issue high-yielding certificates of deposit in small denominations, small savers would withdraw their funds from low-yielding passbook savings accounts in order to buy the certificates. This, in turn, would adversely affect the savings banks, most of whose holdings were tied up in
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