Fixed interest rate deposit based investments have always had a reputation as a good hold in any portfolio. For one, they are able to hedge against more speculative investments inside the portfolio. Second, they provide peace of mind in that the investor will always know exactly what to expect from them. There are many other advantages to finding good fixed interest rate CDs, but none of them are relevant if you cannot find the highest yield!
Finding a good yield in today’s volatile economy is especially important because yields that are not maximized will not outpace inflation. Any financial advisor will tell you that an investment that does not outpace inflation is better off not being done at all. Here are a few ways that you can get the best CD rates from reputable financial institutions.
Expand Your Geographical Reach
With the Internet, fixed rate investors can compare companies from all across the world. You do not have to be limited to companies that are within your local area, and as a matter of fact, limiting yourself to these companies is the worst thing that you can do if you are looking for high CD rates.
Most reputable financial institutions will have options for depositing money directly into a bank account online. You will never have to step into a storefront or wait in any lines. You will also be able to take advantage of many country specific features that are only available in certain parts of the world. There may even be a tax benefit depending on the countries that you choose to invest in.
Use Free Online Tools
The Internet does not only offer expansion of your financial institutions, but it also gives you the tools necessary to get the best rate from those institutions. Many financial websites that are focused on fixed rate investments will actually have an online calculator that you can use to find the best rates. You will be able to budget much more effectively when you use these calculators.
Give yourself the advantage of knowing exactly how much money you will need safe for your future endeavors. The information that is now available freely online was not available in previous generations except to the financial elite.
Use Online Accounts
When you are looking up financial institutions online, take note of the companies that give you a higher interest rate for using their online options. This is a common tactic that many financial institutions use to save themselves money.
When you open an account online, it saves the bank great deal of money in many aspects of their operations. First of all, you will not be going into a storefront, so there is no hardware overhead. Secondly, you do not have to talk to a teller, so there are no human costs except for the cost of creating the online platform. The bank also does not have to spend money on health insurance for those employees. All of these costs that are saved are pushed forward to the consumer via a higher interest rate.
Banks that are well known to offer a certain interest rate off-line will actually offer a better rate online. Do not assume that you have already found the best rates because you have looked at a brochure or an ad.
Big Deposits = Higher Interest Rates
If you can make a large windfall deposit, you will usually come out better on the interest rate that if you tier your deposits. In order to outpace inflation, save your money in a savings account until you have enough of a lump sum to get the highest interest rate that a bank offers for an initial deposit. These rates can mean full percentage points on your certificate of deposit. A percentage point over time can mean tens of thousands of dollars or even more depending on the size of the CD.
