CD Investment Calculator
Plan your CD investment with our free calculator. Compare CD investments with other options, calculate returns, and build a diversified savings strategy.
Investment Details
CD vs Other Investments
Note: Stock and bond returns are historical averages and not guaranteed. CDs offer FDIC-insured guaranteed returns.
Risk vs Return Analysis
CD
Stocks (10% avg)
Bonds (5% avg)
Savings Account
CDs as an Investment
Certificates of Deposit (CDs) are fixed-income investments that offer guaranteed returns and FDIC insurance up to $250,000. They're an essential component of a diversified investment portfolio, providing stability and predictable income.
Our CD investment calculator helps you understand how CDs fit into your overall investment strategy and compare them with other investment options.
CD Investment Strategies
Conservative Portfolio
- 40-60% CDs/Bonds
- 20-30% Stocks
- 10-20% Cash
- Focus on capital preservation
Balanced Portfolio
- 20-30% CDs/Bonds
- 50-60% Stocks
- 10-20% Cash
- Balance growth and stability
CDs vs Other Investments
CDs vs Stocks
CDs: Guaranteed returns, FDIC-insured, low risk, lower returns (3-5%)
Stocks: Higher potential returns (10% avg), market volatility, no guarantees, better for long-term growth
CDs vs Bonds
CDs: FDIC-insured, fixed rate, early withdrawal penalty, typically lower rates
Bonds: Market-traded, interest rate risk, potentially higher rates, more liquidity
CDs vs Savings Accounts
CDs: Higher rates, fixed term, early withdrawal penalty
Savings: Lower rates, full liquidity, no penalties, better for emergency funds
Building a CD Portfolio
1. Diversify Terms
Build a CD ladder with different maturity dates (3, 6, 12, 24 months) to balance returns and liquidity.
2. Spread Across Banks
If investing more than $250,000, spread across multiple banks to maintain full FDIC insurance coverage.
3. Consider Tax-Advantaged Options
Use IRA CDs for tax-advantaged investing, especially if you're in a high tax bracket.
Tax Considerations for CD Investments
CD interest is taxed as ordinary income at your marginal tax rate. This means:
- CD interest is reported on Form 1099-INT
- Taxed at your regular income tax rate (not capital gains rate)
- Consider IRA CDs for tax-deferred or tax-free growth
- Use our tax calculator to see your after-tax returns
For high-income investors, the tax impact can significantly reduce net returns, making tax-advantaged accounts more attractive.