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Is a Certificate of Deposit (CD) a Fixed Income Investment?

Learn why a Certificate of Deposit (CD) is considered a fixed income investment with predictable returns and low risk.

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Video transcript

Yes, a CD (Certificate of Deposit) is a fixed income investment. When you invest in a CD, you deposit a sum of money with a financial institution for a specified period at a fixed interest rate. Upon maturity, you receive your initial deposit plus the accrued interest. CDs are generally considered low-risk, as they offer predictable returns and are often insured by the FDIC up to applicable limits.

Questions and answers

  1. What makes a CD a fixed income investment?

    A CD is a fixed income investment because it provides a fixed interest rate over a specified term, delivering predictable returns upon maturity.

  2. Are CDs insured and safe to invest in?

    Yes, CDs are often insured by the FDIC up to applicable limits, making them a low-risk investment option.

  3. How does the interest on a CD work?

    The interest on a CD accrues at a fixed rate over the deposit period and is paid out along with your principal upon maturity.

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If you found this explanation helpful, check out our related videos on other fixed income investments such as bonds and Treasury securities to diversify your portfolio and better understand your investment options.