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Why you should deposit $10,000 into a long-term CD now
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No matter what economic climate we’re in, it’s crucial to make informed decisions about where to park your savings — but it’s especially important in today’s shifting rate environment. Now that inflation is cooling, rates are expected to decline further in the coming months, so it makes sense to find the best ways to lock in high returns on your cash. And for savers looking for a reliable and low-risk investment option, opening a long-term certificate of deposit (CD) is one way to do that.
While other savings vehicles, like high-yield savings accounts and money market accounts, offer decent returns right now, their interest rates are variable, meaning they can — and likely will — decrease as the broader interest rate environment shifts. In contrast, a long-term CD locks in your rate, guaranteeing you steady earnings until the account reaches maturity. This makes CDs particularly appealing in a climate where the Federal Reserve has already cut rates once and is poised to continue in the coming months.
With the right term and rate, the interest you would earn by putting $10,000 into a long-term CD could be significant, helping you grow your wealth steadily and securely over time. But the returns aren’t the only reason you may want to make this move now.
See how much more you could be earning on your money with a top CD now.
Why you should deposit $10,000 in a long-term CD now
There are a few reasons it makes sense to deposit $10,000 into a long-term CD now, including:
Rates on long-term CDs are still high
Interest rates on CDs are still relatively high, making this an excellent time to take advantage by locking in a fixed rate. While the Federal Reserve’s interest rate cuts in September have lowered borrowing costs, they haven’t yet significantly impacted CD rates, and many banks and credit unions are still offering competitive rates on long-term CDs. For example, it’s possible to find a 5-year CD with an interest rate as high as 4.35% now, which is far above the returns you’ll find with most standard savings accounts.
By acting now, you can secure this high rate for the full CD term, regardless of what happens in the broader economy. This is especially advantageous because financial markets are anticipating further rate cuts from the Federal Reserve in the coming months. Once those cuts occur, banks are likely to lower their CD rates as well. Depositing your $10,000 now ensures you won’t miss out on these favorable rates.
Explore today’s top CD rates here.
CD rates could drop soon
The Federal Reserve is expected to continue cutting rates over the short term, with analysts forecasting additional 25 basis point cuts in November and December. While this may be great news for those looking to borrow money, it presents a challenge for savers. As rates fall, banks typically reduce the interest they offer on new CDs and other savings accounts. This means that if you wait too long, you may miss out.
The longer you wait, the more likely it is that you’ll find lower rates when you finally decide to invest in a CD. By depositing $10,000 into a long-term CD now, you’re essentially hedging against this risk. You’ll be able to lock in a high, fixed interest rate today and earn that rate for the entire term of the CD, even as rates for new CDs drop in the coming months. Waiting, though, could cost you significantly in terms of lost interest earnings.
The returns could be significant
One of the best reasons to put $10,000 into a long-term CD is the potential for significant returns. For example, let’s say you deposit $10,000 into a 5-year CD with an interest rate of 4.35%. Over the five years, you would earn approximately $2,372.34 in interest, bringing your total balance to $12,372.34 by the time the CD matures. That’s a substantial return for a low-risk investment.
Even if interest rates drop during that period, you’ll continue earning at the 4.35% rate, ensuring that your money works hard for you. This predictability and the higher returns compared to typical savings accounts make a long-term CD an attractive option for anyone looking to grow their savings without taking on additional risk.
CDs offer portfolio diversification and stability
In addition to the attractive returns, investing in a long-term CD can also play a crucial role in diversifying your investment portfolio. While stocks and bonds offer the potential for higher returns, they also come with increased volatility and risk — and in today’s unusual economic climate, you may benefit from adding more stable options to the mix.
That’s where CDs come in. A CD provides a guaranteed return, meaning that it can serve as a stabilizing force in your overall financial strategy. This is particularly valuable during times of economic uncertainty, as it ensures that a portion of your wealth is protected from market fluctuations.
The bottom line
In a financial climate where interest rates are likely to fall, locking in a high-rate, long-term CD can be a smart move. By depositing $10,000 into a CD now, you can take advantage of currently high rates, protect yourself against future rate cuts and enjoy significant returns on a low-risk investment. Plus, you’ll have the added benefit of security, knowing that your principal is safe and your returns are guaranteed. Don’t wait too long, though, as this opportunity may not last much longer.
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Gold has been a standout performer in the financial markets this year, with prices climbing rapidly and setting new records. At the start of the year, gold was trading at just above $2,000 per ounce, but its value has soared past multiple milestones in recent months, and, today, gold prices hover above $2,650 per ounce. This upward trend has resulted in big rewards for early investors who saw the precious metal as a safe haven in uncertain economic times. Those who got in before prices surged are now enjoying substantial gains.
For investors who have yet to buy gold, though, the current high prices present a dilemma. Many are hesitant to jump in at a time when the price is near a record high and are instead waiting in hopes that prices will retreat, allowing them to purchase gold at a discount. This cautious approach makes sense in traditional investing logic. After all, buying low and selling high is the golden rule. But in the case of gold, waiting for lower prices may not be as wise as it seems.
While it’s tempting to wait for a price drop, the reality is that this gold investing strategy could be fraught with risks — especially right now. Below, we’ll analyze why.
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3 big risks of waiting for gold prices to fall
Waiting for gold’s price to drop could be a risky bet for the following reasons:
Gold’s price may not drop substantially
One of the primary risks in waiting to buy gold at a lower price is the possibility that the anticipated dip may never happen — or may not be as substantial as you hope. Recent trends in the gold market have shown that while gold’s price may experience short-term fluctuations, these dips have not been drastic. Part of the reason is that gold tends to be highly resilient historically, particularly in times of economic uncertainty, like what we’re facing today. Economic issues tend to push the price of gold higher rather than lower.
Even when gold prices have dipped recently, those drops have been short-lived, bouncing back quickly. In some cases, these dips have been quickly followed by the price of gold reaching new highs. This pattern makes it difficult to predict the market. So, waiting for a significant drop could mean missing out on the chance to buy gold at all. If the price continues to rise — and analysts are already predicting that it will — those waiting for a cheaper entry point could be left empty-handed.
Add gold to your portfolio now.
Your portfolio could be vulnerable without it
Gold has long been considered a hedge against stock market volatility, economic downturns and inflation. And while the stock market has performed well recently, it has experienced heightened volatility in recent months. This matters because when the market underperforms or experiences wild fluctuations, gold tends to shine as a stable store of value. This makes gold an essential component of a well-balanced investment portfolio, providing a level of protection against broader market risks.
If you delay investing in gold while waiting for lower prices, you may leave your portfolio vulnerable to future market shocks, should they occur. Gold provides a critical layer of security during such times, and without it, your portfolio may be overly exposed to short-term market shocks that gold could have helped to cushion.
You could miss out on quick returns
While gold is often viewed as a long-term investment, it also presents opportunities for short-term gains, particularly in today’s rapidly rising market. While the price is currently high, many analysts believe that gold’s price is far from reaching its peak — and some experts predict that it could soon hit $3,000 per ounce or higher. If this upward trend continues, buying now — even at the current high prices — could result in significant profits in the near future.
By waiting for a price drop, though, you may miss out on these potential gains. Market timing is notoriously difficult, and even if gold prices were to dip slightly, the price could quickly rebound, leaving those who waited with no opportunity to benefit from the current rally. Investing in gold now could allow you to take advantage of the potential for short-term profits while also securing a position in a valuable long-term asset. And if gold continues to climb, today’s prices may soon seem like a bargain.
The bottom line
Investing in gold has long been a strategy for preserving wealth and protecting portfolios against volatility, so it makes sense to add it to your portfolio, but if you’re waiting for lower prices to enter the market, that may not be the most prudent approach. The price of gold may not drop substantially and delaying your investment could leave your portfolio vulnerable to stock market fluctuations. You might also miss out on an opportunity for both short- and long-term profits. So, given the current trajectory of gold prices and the uncertain economic environment, now may be the right time to consider investing in gold rather than waiting for a dip that may never come.