What is the difference between a bond and a CD?

Bonds also expose investors to both interest rate risk (how a bond’s value responds to a rise or fall in interest rates) and credit risk (the issuer’s creditworthiness). In contrast, CDs have little risk to the principal. Rates. CDs may offer slightly higher annual percentage yields (APYs) than a typical savings account.

Is a certificate of deposit a good investment?

Certificates of deposit (CDs) and bonds are both considered safe-haven investments. Both offer only modest returns but carry little or no risk of principal loss. They are much like interest-paying loans, with the investor acting as the lender.

What is a certificate of deposit & how does it work?

Certificates of Deposit are deposit accounts held at a bank or credit union. Think of a CD as an alternative to a savings account to earn interest on your money. Yet, unlike a savings account, a CD requires that you commit your savings for a specific period to earn the interest. How Does a Certificate of Deposit Work?