HI. Thanks for joining us.
We teach finance basics. HI welcome. Today talk about two warnings to consider before investing in a CD, a certificate of deposit. It’s a type of a lending investment.
The return is the original investment plus interest payment. Let’s say grandpa gives you $10,000 for my graduation. So the bank offers me a 3% interest to gain.
There are two warning signs to consider. Return is 3% but taxes but I lose 1/3 from taxes made from the interest. So my 3% gain is now down to 2%.
In the United States inflation is about 3% so my 2% (gain) minus 3% equals negative 1% or a lost of about 1% in theory. The main point to consider is that time is your most important asset and the best way to become rich is to choose an investment that gives you a return way above inflation alone.
Professor Savings signing off and please subscribe to our channel.