If you have good cash in hand and you know you are not going to use it anytime soon, then you should consider investing in a financial instrument like Certificate of Deposit (CD).
Imagine you have $1000 in hand, and you don't use it for a year, according to the concept of 'time value of money', the value of money is likely to depreciate with time due to inflation. This means value of a 1000 dollar will not remain the same after a year, it is likely to fall.
However, if you invest the same amount in CD's, you can multiply your savings by earning interest on your investment money; when it's time to withdraw, you won't be taking home just a $1000 but a grand total of $1000 along with the interest earned on your investment.
Just like a savings account and stocks, Certificate of Deposit is a good way to multiply your investments and is in fact a better alternative. Unlike stocks, with CD you don't have to worry about the market volatility. It is considered to be one of the safest forms of saving money for long periods of time.
If you are new to this term, then don't worry! A certificate of deposit is basically a debt instrument or a promissory note, issued to investors by financial institutions like banks. In CD, you lend certain amount of money in the form of an investment to the bank for a predetermined length of time (maturity date) and a rate of interest is paid to you by the financial institution. However, what's important to note here is that you can't withdraw your funds before the maturity date. So, you must make your investment decision wisely and cautiously. For this make use of certificate of deposit calculator!
A certificate of deposit calculator is a financial calculator that enables you to calculate the amount of interest rate you can earn on a certificate of deposit. By using a certificate of deposit calculator, you can view how much profit you'll be taking home after the maturity date.
This calculator is available online and is very easy to use. You don't need to get in touch with a financial consultant for this in order to make a good investment decision.
To use a certificate of deposit calculator, all you need to do is enter the desired information in the calculator and calculate. Yes, it's that simple!
What's even more interesting about it is that you don't just get a figure displayed on the screen, in fact the calculation is displayed properly in the form of a complete result summary report with a graphical representation and detailed schedule of certificate of deposit balances showing you how much interest you'll earn each year during your maturity term.
To get started using a certificate of deposit calculator here's what you need to insert:
1. The initial deposit amount- this is the amount at which you will purchase the certificate of deposit.
2. Months- This is the maturity time of the CD in months. Let’s say, the maturity time of the CD is 5 years, this equals to 60 months.
3. Interest Rate- Here you will have to insert the interest rate in percentage.
4. Interest- In this you have to insert the compounding period. For example is the financial institution you'll be purchasing CD from will compound interest in your account monthly, quarterly, semi-annually or annually?
Once you enter this data, all you need to do is click on the 'calculate' button and you are good to go. The certificate of deposit calculator will calculate annual percentage yield (APY) and your ending balance that you can withdraw after five years.
To make the best investment decision, try inserting different proposed interest rates and maturity periods offered by different banks. Compare and evaluate to see which bank offers greater yield and then make your final decision.
A certificate of deposit calculator is ideal for those who have no financial background. By simply plugging in the required information, you can easily deduce your final balance without doing all the math.
Let's take a look at an example. Suppose you purchase a certificate of deposit of $10,000 that is compounded annually and 5% interest rate with a maturity period of 1 year. Once you insert this information in the certificate of deposit calculator, you'll see the ending balance of $10,500. This means you will be earning $500 on $10,000 in a year.
Without a certificate of deposit calculator, you would have to do the lengthy calculations on your own, insert interest rate formulas and deduce the ending balance. This can be frustrating especially if you are not good at financial calculations.
By using a certificate of deposit calculator, you can easily compare and evaluate different interest rates and maturity terms offered by different banks and make a good investment decision quickly.
Also, with the help of a certificate of deposit calculator, you can make smart investment decisions for a happy and a secure future. By choosing a good interest rate and maturity term, you can ensure that you get juicy returns on investments on CDs in the future.
So, whether you want to save money for a down payment on a home or for your child's college tuition fee or simply want to ensure financial stability after your retirement; certificate of deposits are a great vehicle for saving money for a bright future!
However, to ensure you tap the best CD investment opportunities on the market, make use of a certificate of deposit calculator today!