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2 Warnings Before Investing Certificate of Deposit- Professor Savings

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.

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