(NAPSA)—In an unsteady economy, Certificates of Deposit (CDs) are gaining appreciation among investors for offering a reliable return without market risk of losing principal. Whatis a CD? CDs are savings vehicles offered through banks that pay a fixed rate of return on your principal for a specified period of time, such as 80 days or five years. Interest payments are com- pounded daily, weekly or monthly, depending on the terms of the CD, and then credited to the account. Yourrate is locked in for whatever term you’ve purchased, and won’t change regardless of what’s happening in the marketplace. And unlike stocks or mutual funds, the money invested in a CD is insured by the Federal Deposit Insurance Corporation (FDIC) for up to $100,000 per account. Sometimes a minimum opening balance is required to open a CD. A CD might be good for you ... If you're a conservative investor, CDs offer a guaranteed rate of return and are a good, low-risk savings choice. CDs also may be a viable option for people looking for a place to hold their moneyfor a shorter period of time. If you plan to buy a homeorcar in five years, a CD mayprovide a better rate than a standard savings or money market account. Because there may be a penalty for early withdrawals from a CD, be sure to have cash on hand to cover small emergencies in an account that allows you to withdraw withoutfees. Saving money in a CD can help make your financial future more harmonious. Working CDs into your portfolio Although the stock market may yield bigger gains than CDs when the market is looking up, you risk losing principal if your fund or stock goes down in value. Adding CDs to your savings portfolio can help provide some cushion during market downturns, when equity investments may not be performing as well. You may want to consider “laddering” your CDs to make the most of your money as the market fluctuates. For example, you can divide some money amongfive CDs with durations from six months to five years. If interest rates go up, the moneyin the shorter-term CDs will soon be available to re-invest at a higher rate. However,if interest rates go down, the money in the longer-term CDs will keep growing at a higher rate than what’s currently being offered. For more general information on individual savings solutions and product disclosures, visit www.allstate.com or www.All statebank.com.
