Is there any risk associated with investing in CDs?
CDs (certificates of deposit) are' insured by the Federal Deposit Insurance Corporation (FDIC). There is no risk of default on the principal of a CD, but there is risk that the value of the CD will diminish through loss of purchasing power. Remember, the only true value money has is the value of the items it can buy. If the value of the items an investment can buy is reduced, then there is a risk of inflation. Many retirees are frustrated when their CDs or bonds come due and the amount of purchasing power has been reduced by inflation.
CDs (certificates of deposit) are' insured by the Federal Deposit Insurance Corporation (FDIC). There is no risk of default on the principal of a CD, but there is risk that the value of the CD will diminish through loss of purchasing power. Remember, the only true value money has is the value of the items it can buy. If the value of the items an investment can buy is reduced, then there is a risk of inflation. Many retirees are frustrated when their CDs or bonds come due and the amount of purchasing power has been reduced by inflation.
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