Investment strategies tend to change as people age. During younger adulthood, there is often more room for risk because individuals still have plenty of earning years remaining to make up for any losses and rebuild their portfolios. As people age and their funding pool grows, they end up in a situation where they not only have more to lose, but less time to recover from losses. For retirees and those in late middle age, low-risk investments start to make more sense.
This is where understanding the best bank CD rates starts to come in handy. CDs are incredibly low risk. You invest your money for a guaranteed return of a certain, usually small percent, over the course of a set period of time. CDs can range in time from a few months to a decade or, in some cases, more. This makes CDs a great investment option for the elderly, and there are plenty of times in life when setting up a CD can be beneficial.
Some of these events are occasions like the birth of a grandchild or a graduation. These are times when grandparents or family friends commonly provide gifts, and a CD may add value to what you offer. If you put funds into a CD as part of a gift, the amount you are giving grows over the years. You can also use a CD to invest unexpected income without putting it at risk.
A CD is not only useful in responding to a life event, but also in preparing for one. As people age, they are bound to experience major lifestyle changes. Whether it is choosing to move to a new region or making adjustments due to health concerns, investing in a CD can create some financial flexibility while ensuring you do not lose your base funding. Comerica Bank can help you set up the right CD for your needs, and our infographic below can help you envision a variety of situations when a CD makes sense.
