It’s been 35 years since CDs provided this rare opportunity.

To get the most competitive interest rates when investing in certificates of deposit (CDs), you generally have to agree to keep your money for a long period of time. That’s because most CDs require you to keep your money invested for the entire CD term to avoid penalties. The period can be up to 5 years.

But right now, you have a unique opportunity to get the best price through a short-term commitment. This hasn’t happened in about 35 years. Let’s find out why this is happening now and why taking advantage of this unprecedented situation can help.

Short-term CDs rarely offer the best prices. But now it is.

If you look at the history of CD interest rates, the average yield on a 5-year CD has almost always been higher than the average yield on a 6-month CD. In fact, this happened from 1989 to May 2023.

Of course, there is a good reason for this. If you agree to put your money in a CD for five years, you’re taking on a lot more risk. If interest rates rise during that period, problems arise. And giving up your ability to access your money for too long limits your flexibility. That’s why banks pay more if you promise money for longer. This is the so-called ‘term premium’.

But in May 2023, this long-standing tradition came to an end. From then on, six-month CDs began offering higher average returns and have continued to do so ever since. And the one-year CD also It offers a higher average return than a 5-year CD and has been doing so for several months.

This is a major transition after about 35 years of long-term CDs that have consistently offered better prices. This is called a yield curve inversion, and it is an unusual phenomenon that does not occur often.

Why is this a rare opportunity?

So why does this unusual phenomenon present you with a rare opportunity? It’s simple. You make short-term investments and agree to invest your money for one year or less. And you can earn very competitive returns while taking on very little risk.

According to Ascent’s list of the best CD rates, there are a variety of options with interest rates around 5.00% or higher for six-month and one-year CDs. This is an FDIC-insured CD, so you will not lose money on the CD unless you invest less than $250,000 and withdraw your funds early. It is unheard of to receive such high returns on a virtually risk-free investment. especially Not like that You have to make a long-term commitment.

If you buy one of these CDs, you won’t agree to give up your money for five years. Cash will be readily available if you need it. As interest rates rise further and better investment options become available, your money won’t be locked up in a CD for years. There are few disadvantages and many advantages, especially compared to the past when you had to leave your money in the bank for years to get a steady 2% or 3% return from a CD.

If you have money you won’t need for six months or a year, there’s no reason to miss this opportunity. It’s been 35 years since investors last had this opportunity, so it may not come again for another few decades. If you don’t want to have any regrets, jump in now.

This savings account is FDIC insured and can earn 11 times the bank’s earnings.

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