Quote:
Originally Posted by Walrus
Thanks. I actually do understand what inflation is, but not how it pertains to a CD. It's still hard to understand why it's possible not to earn any money with a CD if inflation goes up. If the CD is for 3.50% and I keep it in for a year I will make a small gain. How can it not make money if inflation rises during that same year? I'm still going to make interest off this money.
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Yes, you are correct. You still make 3.50% from the balance of your CD. The poster who was talking about inflation is just looking at it in a more advanced way, suggesting he would want to put his money in investment vehicles that make more than the yearly inflation rate. If your not concerned about inflation then just ignore what he posted.
Again though, you should check out money market bank accounts. They give you about 3-4% interest on your balance and it's just like a regular checking or savings account at a bank. For a 3.5% interest for a CD you would have to get 5 years or longer terms, not very liquid if you need the money all of a sudden.