The bank certificate of deposit. At their very core, certificates of deposit have a lot in common with bonds. The investor agrees to loan a sum of money to the bank for a set period of time. In return, the bank agrees to pay a negotiated rate of interest, and when the time s up, the investor get his money back, plus interest.
CDs have a few advantages over their more risky cousins.
Also, one person having accounts at different banks could be entitled to additional coverage. Ron White, a spokesman with the Better Bank Group, said that puts CDs just behind treasury bonds as one of the safest forms of investments. Because they are viewed as a shorter-term investment than a bond, a person can use a CD to generate working cash in a relatively short amount of time. Typically, Russell said, an investor will get a certificate for six months and up to two years. Unlike a bond, where the interest is paid out in regular intervals, most CDs compound interest.