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2 Bumps

How to make $1,000.00 grow?

If I put it in the bank...where do I put it?
What's a CD exactly?
Or whatever else they have to offer :/
Not sure what I want to do? :/
Thanks!

Answer Question
 
Anonymous

Asked by Anonymous at 11:25 AM on May. 16, 2011 in Money & Work

Answers (2)
  • How long are you willing to put it away?

    I put our tax return money into a 5yr CD. It is basically an account you put money into that builds interest. Some banks will let you borrow against it, but you are not allowed to add to/remove the money until your term is up. The longer you leave it, the higher the interest. It is better than stock investment, as there is no risk. The money will always be there until you take it out.
    matobe

    Answer by matobe at 11:30 AM on May. 16, 2011

  • A CD is the abbreviation for a certificate of deposit. Basically if you promise to save 'x' amount of money for 'x' amount of time (usually 3 months to 5 years) they'll promise you a higher rate of return than you would get at a regular savings account. Right now though, rates are still pretty low. You're probably not going to get more than 1 to 2% interest at a typical bank. But search online (bankrate.com) and see what you can come up with.

    Another option would be money market accounts which should offer you a slightly higher rate of return without limiting your access to the money. You might get 2% or a little bit more and be able to write 1 to 3 checks a month against the money in there without penalty.

    If you're investing for the long term a mutual fund would probably be the best option. Just remember that long term means 5 to 10 years. So if you need the money before than, a mutual fund is a bad idea.

    Erica_Smerica

    Answer by Erica_Smerica at 5:49 PM on May. 16, 2011

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