Stay Away From Certificates Of Deposit

Dave's got a big reason for staying away from certificates of deposit.

QUESTION: Autumn’s grandmother died last month. The certificate of deposit that her $58,000 was in will mature next month. The certificate of deposit is only making 3.1% interest, and Autumn wants to invest it. Where should she put it?

ANSWER: CD rates don’t even match inflation. I call them certificates of depression. When you say investing, I think 5 years or longer. I buy good growth stock mutual funds in the stock market. A good one has 90 to 200 of America’s best companies in it. As the American economy goes over 10 years, what are these companies going to do? The answer is what you’ll end up with, which is 12%. Don’t move it into another certificate of deposit. If you want, set it in a money market account and then you can move it out without any penalties.

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