When it comes to investing in CDs (bank certificates of deposit), brokered CDs are gaining more and more attention. With the recent increase in interest rates, clients can now get between 4% and 5% on insured bank deposits (as of January 2023). Brokered CDs are an attractive option because they allow clients to diversify their holdings in many banks through one U.S. brokerage account, which means that they can invest more than $250,000 in CDs and still be covered by FDIC.
The easiest way to invest in a CD
Buying brokered CDs is much more convenient than going to a bank, opening an account, and putting the money in an account directly. You simply call your investment advisors and ask them to take care of it for you. When buying brokered CDs, clients can choose the type of CD and term length that best suits their needs. They can also choose from a variety of banks, including many of the top-rated banks in the U.S. Best of all, it’s easy to compare rates and terms of different banks to find the best deal.
No early withdrawal penalty
Brokered CDs normally don’t have an early withdrawal penalty. However, if a brokered CD is sold before maturity, it may be worth less than when it was purchased.
5 benefits of brokered CDs
- Higher Rates: Brokered CDs often pay higher interest rates than traditional bank CDs, so investors can earn more on their money.
- Variety: Brokered CDs allow investors to choose from a variety of maturities, ranging from short-term to long-term.
- Liquidity: Brokered CDs are often more liquid than traditional bank CDs, so investors can access their money more easily.
- Insured: Brokered CDs are FDIC-insured, so investors can rest assured that their money is safe and secure.
- Diversification: Brokered CDs offer investors the opportunity to diversify their portfolio with investments in different maturities and financial institutions.
Note that interest rates are indicative only and subject to change. If you’re looking to invest in brokered CDs, please call our office at 02-624-2788 to see how we can help.
Douglas Goldstein, CFP®, GFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Published January 10, 2023.