Certificates of Deposits
In banking terminology, the term Certificate of Deposit refers to a low risk savings instrument based on a term deposit with a specified rate of interest. A Certificate of Deposit or CD can usually be obtained at commercial banks or at savings and loan institutions.
For example, because Certificates of Deposit are not publicly traded investment vehicles, you will not find Certificates of Deposit on any exchange. Nevertheless, Certificates of Deposit can be obtained through a stockbroker who, because of the different sources they can tap into, will typically have a much wider choice of CDs available than a bank, as far as yield is concerned. Certificates of Deposit may be redeemed before maturity, although the bank holding them will generally charge a penalty for early withdrawal that may wipe out much of your interest. Check with your bank, since each financial institution has their own early withdrawal policy on CDs. Certificates of Deposit make a perfect investment vehicle for more conservative investors.