Locking In a Guaranteed High Return

CDs, Saving

April 18, 2024

I need to repeat the advice I gave you recently because it is so important I want to make sure you follow it!


Right now, the smartest move you can make is to lock in a safe return of 5% or more for the next year to 18 months. And I mean right now!  If you wait or file this away as something you’ll get to when you have the time, you are going to miss the chance to get paid a guaranteed 5%.


Let me explain.


You can currently purchase a certificate deposit (CD) at a bank or credit union that will guarantee you a return of at least 5% for a year or more. Not every bank or CD offers such a great deal, but it’s easy to find ones that do. You can do a quick web search of “high yield CD rates” to find CD offers that pay 5% or more. (And you should check out the current offer at Alliant Credit Union, it’s a great deal. Go to myalliant.com/ultimate)


But I need to say it again: these high yields aren’t going to be around for long.


Time for a quick Suze School lesson:


The rates on CDs react to whatever the Federal Reserve is doing with its Federal Funds rate. For two years the Fed has been raising the Federal Funds rate. That’s why you can currently get that great 5%+ guaranteed rate on a CD maturing in a year or more. (And to be clear: the rate you are given when you open a CD account is locked in for the entire term. If you have a 12-month CD, you will get paid the initial interest rate over the entire 12-month term, no matter what changes the Fed makes in its interest rate.)


But the Fed has told us that because its rate hikes are working—the rate of inflation has calmed down a lot—they are looking towards reducing the Federal Funds rate. The timing of when cuts might start is up in the air as the Fed continues to monitor the rate of inflation, but it very well could start later this year.


And when that happens, the interest offered on new CDs will start to fall as well.


Please, please, please don’t miss out on this chance to lock in a high return on money you want to keep safe. The Fed has told us that this deal won’t likely last for much longer.

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