Should you buy a CD or a stock?

High CD rates may be tempting, but advisors recommend investors to stick to their long-term financial plans. Stocks and CDs perform different functions in your portfolio and should not be substituted. Stock markets offer higher risks and higher returns compared to CDs, so a switch may not make sense for investors with moderate risk appetite.

Are CDs better than stocks?

Stock markets offer higher risks and higher returns compared to CDs, so a switch may not make sense for investors with moderate risk appetite. Limitations of CDs include locking funds, early withdrawal penalties, and reduced competitiveness if the interest rate environment changes. Does the Current Market Favor CDs Over Stocks?

Should you invest in a CD?

Once you factor in inflation and taxes, a CD’s return is relatively low compared to many other investments. Reinvestment risk. There is the risk that, after your CD matures, you won't be able to reinvest it at an equal or higher rate. Conners says the best time to invest in CDs is when there is a surge in inflation.