If you have a decent amount of cash, say $10,000, and wondering what kind of investment would yield higher returns with minimal risk, then Certificates of Deposit are an option worth considering. A CD is one of the best short term investment options.
A CD is a certificate issued by the bank upon depositing money and it indicates the interest rate and the duration after which the interest is redeemable. It differs from a typical savings account in that early withdrawal (before maturity) of your funds from the former will incur penalty fees, while the latter may not. This should not discourage you as many banks and financial institutions offer CD maturity periods as low as 3 and 6 months. CDs also fetch higher interests than ordinary savings accounts.
The Federal Deposit Insurance Corporation (FDIC) allows only up to $250,000 in deposit from each depositor, and this applies to the insured banks alone. Say, for instance, you have deposited $15,000 and agreed to an annual compound interest rate of 6%. After 1 year, the CD’s value will have risen to $15,000 + ($15,000 * 1.06), which amounts to $15,900. You can also choose to compound it quarterly or semiannually.