- I'm trying to reduce the risk I'm making with my finances — and a CD is a good way to do that.
- I used to spend hours a day researching the markets, and I still found myself losing money.
- With a 12-month CD, I know exactly how much money I'll get back in a year.
- Earn 4.25% APY. Plus, new customers can earn $250 with code GET250 at sign-up. APY with a Western Alliance Bank High Yield Savings Account.
One of my biggest goals in recent years has been working on the state of my finances — especially what risks I'm taking. Over the past few years, I've infused too much risk into my financial portfolio, investing in individual stocks and cryptocurrency, and faced steep losses. I wanted this year to be a time when I rebuilt my overall net worth and grew my finances back to where they were before I made bad trades in the market.
At the start of the year, I asked a financially savvy friend of mine to eyeball my portfolio. One of the biggest pieces of feedback he had was to move two-thirds of the cash I have sitting in my savings account into a 1-year CD with a 5% APY.
I decided to follow his advice. Here are three reasons why doing that was the best financial decision I've made in a while.
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1. It's not a risky choice
Since my financial goal this year was all about growing my net worth, I decided that locking up ⅔ of my available cash into a 12-month CD, rather than investing it in an index fund or in individual stocks, was a smart move. That's because CDs are low-risk savings tools that are FDIC-insured, up to $250,000.
When the CD matures in a year, I'll get my 5% guaranteed payout. After two years of making bad investments and losing money, it's felt nice knowing that my money is sitting in an account that is extremely low-risk.
2. It required no attention or knowledge
Before 2020, I never even had a brokerage account or invested my money anywhere. But when I started buying individual stocks and cryptocurrencies, I spent lots of time researching as much as possible to try and make educated decisions. After a few months of dedicating two to three hours a day to my investment portfolio, I realized that this wasn't sustainable.
The time I was spending researching the best stocks or cryptocurrency to buy wasn't helping me yield good returns. I lost a few hundred dollars over the course of a week just making trades I thought were a good idea to make.
Because I was a rookie investor with no real knowledge or experience, I decided that I needed to stop playing around with the stock market and crossing my fingers that the cryptocurrency I was buying would one day lead to a big payoff.
Instead, I wanted to spend a few years rebuilding my net worth by sticking my cash in a CD that didn't require any ongoing attention. I could leave my money in there without having to worry that my lack of experience or knowledge would interfere with the outcome.
3. I know exactly what return I'll get
While I do have some of my money invested in a SEP IRA retirement account and index funds, I wanted to grow a big chunk of my money as much as possible in a short-term time frame.
It seemed like the only guaranteed way to do that was to put the cash in a CD that offered 5% APY after 12 months. If I put the money in the market, there would be no guarantee of what my yearly return would be. And if I put the money in a high-yield savings account, the amount I'd earn at the end of the year would be variable.
A CD is a risk-free option to turn to in order to get the best possible return on the money in a short timeframe — I'm glad it's the choice I went with.
This article was originally published in October 2023.
*Axos ONE Savings and Checking Bundle: The Annual Percentage Yield (APY) is accurate as of 04/01/2025. The base and promotional interest rate and corresponding APY for Axos ONE Checking is variable and is set at our discretion. The base and promotional interest rate and corresponding APY for Axos ONE Savings is variable and is set at our discretion. Axos ONE Savings is a tiered variable rate account. Axos ONE Checking is a non-tiered variable rate account. Interest rates may change as often as daily without prior notice. Fees may reduce earnings. Promotional terms and conditions are subject to change or removal without notice. Incentive may be taxable and reported on IRS Form 1099-MISC. Consult your tax advisor. After the accounts are opened, the amount of incentive earned will depend on meeting the additional requirements outlined below. The Axos ONE Checking account will earn a base rate of 0.00% APY. The Axos ONE Savings account will earn a base rate of 1.00% APY. Axos ONE accounts are eligible to receive a promotional APY for each statement cycle where the promotional criteria are met during the Qualification Period. To receive the promotional APY on both Axos ONE Checking and Axos ONE Savings, the Axos ONE Checking account must meet both of the requirements in either Option 1 or Option 2 below during the Qualification Period: Option 1 1. Your Axos ONE Checking account has received qualifying direct deposits of at least $1,500 in total. 2. The average daily balance of your Axos ONE Checking account is at least $1,500. Option 2 1. Your Axos ONE Checking account has received qualifying deposits of at least $5,000 in total. 2. The average daily balance of your Axos ONE Checking account is at least $5,000. If both of the requirements in either Option 1 or Option 2 above are met during the Qualification Period: The Axos ONE Checking account will earn a promotional rate of 0.51% APY for the statement cycle in which the requirements are met. The Axos ONE Savings account will earn a promotional rate of up to 4.66% APY for the statement cycle in which the requirements are met. The Qualification Period is from the 1st of the month through the 25th of the month. The Qualification Period for new accounts will begin on the day the account is approved. Any qualifying direct deposits received after the 25th of the month will count toward the next Qualification Period. A direct deposit is an electronic deposit of your paycheck or government benefits, such as Social Security, Disability, etc. Other deposits (i.e., online banking transfers, ATM and mobile check deposits, etc.) or person-to-person payments are not considered a direct deposit. Qualifying deposits only include deposits from the following eligible sources: (i) ACH transfers from external accounts, (ii) inbound wire transfers from external accounts, (iii) check deposits. Qualifying deposits do not include: (i) transfers internal to the bank (i.e., transfers between an account holder's Checking and/or Savings account), (ii) interest payments, (iii) promotional bonuses, (iv) credits, reversals, and refunds. Both accounts must be in an open and active status on the date the interest is paid to receive the promotional APY for that statement cycle. Account transactions may take one or more business days from the transaction date to post to the account.
**LendingClub LevelUp Savings Account: Earn 4.40% APY when you deposit at least $250 per month, earn 3.40% standard APY if minimum isn't met.
***CIT Bank Platinum Savings: Transfer a one-time deposit of $50,000+ for a Bonus of $300 or a one-time deposit of $25,000 -$49,999.99 for a Bonus of $225
****SoFi members who enroll in SoFi Plus with Direct Deposit or by paying the SoFi Plus Subscription Fee every 30 days or with $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either SoFi Plus or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi Plus members are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. See the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.
*****Public High-Yield Bonds: All investing involves the risk of loss, including loss of principal. Past performance does not guarantee future results. This is not a recommendation or offer to buy/sell securities or engage in any investment strategy. Brokerage services for treasuries in a Treasury Account and US-listed securities, options, and bonds in a self-directed brokerage account are offered by Open to the Public Investing, member FINRA & SIPC. Public Advisors and Public Investing are affiliates. Self-directed Individual Retirement Accounts and Bond Accounts are offered by Public Investing. A Bond Account is a self-directed brokerage account with Public Investing, member FINRA/SIPC. Deposits into this account are used to purchase 10 investment-grade and high-yield bonds. The 6.9% yield is the average, annualized yield to worst (YTW) across all ten bonds in the Bond Account, before fees, as of 3/13/2025. A bond's yield is a function of its market price, which can fluctuate; therefore, a bond's YTW is not "locked in" until the bond is purchased, and your yield at time of purchase may be different from the yield shown here. The "locked in" YTW is not guaranteed; you may receive less than the YTW of the bonds in the Bond Account if you sell any of the bonds before maturity or if the issuer defaults on the bond. Public Investing charges a markup on each bond trade. See Public's fee schedule for more information. https://public.com/disclosures/fee-schedule. Bond Accounts are not recommendations of individual bonds or default allocations. The bonds in the Bond Account have not been selected based on your needs or risk profile. See Bond Account Disclosures to learn more. https://public.com/disclosures.
