What is the difference between a CD and a stock?

Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning! CDs tend to be low-risk investments that provide fixed income, whereas stocks provide potential higher returns, but with more risk. Learn more about the differences.

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?

CDs provide a sense of stability to your portfolio while stocks might provide a better return. Choosing the right investment can be tough but working with a financial advisor can give you the right insights to choose the best investment options for your overall plan. What Is a CD?