It's impossible to say for sure without knowing more about your overall situation; however, I'm not sure that a CD would be your best bet. The highest rate on a 1-year CD (according to Bankrate) right now is around 1.25% annually. However, you could put that money in a savings account at an online only bank (e.g. Ally, American Express Bank, etc.) and get nearly that same amount (for example, Ally is currently paying 0.99% on their regular savings accounts with no account minimums, and there are others where you could get 1.05% or 1.10%) without locking your money up for a year (or more), and without incurring penalties if you needed to take it out within the term of the CD. With an online only bank's savings account, you don't need to worry about your money being tied up for the term of the CD, and you are not giving up much, if any, interest. Additionally, if rates start to rise in the next 6-12 months, the rate on a regular savings account should increase as well; whereas, the rate on the CD will remain the same until maturity. I would suggest looking into some of those options before utilizing a CD. And I definitely would not recommend buying a CD with a term longer than about 1-year (if even that long), as it is nearly certain, barring an unexpected decline in the economy, that the Fed will begin raising interest rates within the next 6-12 months. At the current rates and the current spread between CDs and what you can get in a savings account at an online bank, I don't see much benefit in going with a CD at this point in time. Hope this helps. Best of luck.
Cash, including CDs, can play an important role in an overall investment portfolio. Studies have shown that a broadly diversified portfolio, including an equal weight in cash, perform well. Cash also serves a specific purpose. One such purpose is being able to seize opportunities when they come along that you might have to pass up if you had no cash. Thus, yes, cash including a CD can be a good decision. That said, you should have your portfolio evaluated to be certain you are not overloading in cash or under allocating cash.
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