Certificate of Deposit

Archive for September, 2009

Question: If you have $1000.00 to invest, which account would you chose?

(a) Checking account
(b) Money Market account
(c) Passbook savings account
(d) Certificate Of Deposit
What will be the advantages and disadvantages of each type of investment?

Answer: I had this question in Principles of Economics.

All of this would depend on how much availability I would need. All are FDIC insured, so that’s no problem.

A. I would choose a checking account if I needed this money to spend on a regular basis. The disadvantage is that if you fall below a minimum, there may be a penalty.

B. A Money Market account is convenient because it tends to pay more interest than a regular savings account and you can write checks it against it as well. The disadvantage is there is a limit to how many withdrawals and deposits you can make with the account.

C. A passbook account pays very little interest, but it is also FDIC insured and convenient to withdraw and deposit money.

D. A bank CD pays more interest most times than a savings account. The disadvantage is that it is locked up for a period of time and early withdrawals are subject to penalties.

So its all according to what my goal would be with the money. I would prefer a CD because it would probably pay the most interest.

Investment Advice : Advantages & Disadvantages of Investments

Question: What are the pros and cons of a Money Market vs. a regular savings account?

Answer: Really the only pro for a savings account is that there are no restrictions on withdrawals and transfers while Money Market accounts may have some minor restrictions or fees (i.e. limited withdrawals per month) or a minimum balance. Otherwise, Money Market accounts give far higher interest rates than a regular savings account, at least in most financial institutions.

Personal Finance & Money Management : What Is a Money Market Savings Account?

Question: Do I have to pay income tax on money I recieved as beneficiary on an annuity and on a Certificate Of Deposit?

Answer: The value of an inheritance or gift is not taxed to the recipient, but any earnings on the money would be taxed as ordinary income. The company paying the annuity would break down the income portion and return of investment portion generally, but if you inherited it you would need a CPA to help you determine the taxable amount.