The money will be FDIC insured and I have other money laying around for emergency,
I want to put away the money to earn interest instead of have it sitting in a low interest Account at a mortar and brick bank.
Do I have anything to lose? You think I shouldn't put away $20 000 for so long?
My goal is to save $9000 for the rest of the year so I'll have a bough emergency cash.
A 60 month CD making 2.23% will only make you $2,331.70 on the initial $20,000 you deposit. That's not really a lot. And, of the course, the 2 year CD is going to make a lot less, only $645.12 on the $20,000. On the plus side, it's a guaranteed rate, and you know what you will get out of it. But, as you can see, you don't make a lot by being so safe.
If you invest is a mutual fund, you could make a lot more. How much is unknown, but if you make 10% each year, you make $12,210.20 on that same $20,000 over 5 years. That's over 5 times more you make. But, you also have more risk, What you make is dependent on the market, and you could lose money.
Unless you are saving the money for something specific, I would put the $20,000 into a retirement account. I'm assuming you are young, and if you put it in a retirement account early, and just let it sit, you can have a really nice amount by the time you retire to be added to any other retirement accounts you have, plus social security benefits you may receive.
If you do not need the money for 5 years, then use the 5 year CD.
But there is no reason to put all $20K into a single CD. You should divide the money into parts - - - say 10 parts of $2K each - -- - and invest each of the parts into separate CDs. This way, if you need to cash in your CD early, you do not have to cash in the entire $20K and pay the penalty on the entire CD amount.
If you will not need the money for more than 5 years, consider taking on more risk by investing in a moderate risk mutual fund.
Those aren't your only choices. You can also "ladder" your CDs. For example, put $5000 each into a 2, 3, 4, and 5 year CD.
Neither. Locking up your money for so little in return ( Just $446 a year for the five year) makes no sense. You can find stocks with 3% dividend yields without a lot of trouble. Yes, there are risks involved with stocks but, there are also benefits like appreciation and dividend increase.
Try stocks instead.
you are going to lose out as rates rise. why not ladder your cd's to take advantage that rates will rise. for example, 5k 1 year, 5k 2 year, 5k 3 year, etc. gives you a chance to get better rates on your money.
separately, you should consider blue chip stocks which pay dividends of 2%, because you are losing out on the real area to achieve investment returns, such as AAPL, SBUX
Why would you lock it up for 5 years when if anything, rates should go up? You aren't going to get good rates on CDs today, there really isnt any good rate.
I'd go with the higher, though that's not all that much of a yield.
I get 14% with peer to peer lending. 7.5% in REIT's.
