High-Interest Bonds or CDs?

Whether you’re saving for a down payment, a dream vacation, or a rainy day fund, there are better options than a traditional savings account to grow your money faster. High-interest investments like bonds and CDs can give your savings a boost and get you closer to your goals.

The Challenge: Bonds vs. CDs

Choosing between bonds and CDs can be tricky. Let's explore these two popular investment options to help you decide which one is right for your portfolio.

What are Bonds?

Bonds are essentially loans you make to organizations often in exchange for high-interest payments. You hold the bond for a set period until it matures, at which point you receive your initial investment back plus the interest. Worthy bonds are a type of demand bond, meaning you can buy and sell them at any time.

Benefits of Bonds:

• Low minimums: Start investing with just a small amount, like $10 with Worthy bonds.
• High-interest returns: Often outperform standard savings accounts.
• Liquidity: Some bonds, like Worthy bonds, offer easy buying and selling.
• Community impact: Invest in local projects and businesses with municipal bonds or Worthy bonds.

Drawbacks of Bonds:

• Risk of default: Some bonds, especially corporate bonds, carry the risk of the issuer not repaying your investment.

What are CDs?

Certificates of Deposit (CDs) are offered by banks and credit unions. You deposit your money for a set term (typically 6 months to 10 years) and earn interest. The longer the term, the higher the interest rate.

Benefits of CDs:

• FDIC insurance: Your money is insured up to $250,000 per depositor at FDIC-insured banks.
• Accessibility: Easy to open a CD at most banks.

Drawbacks of CDs:

One major downside to investing in CDs over bonds is that their variable rates might not always compete with inflation. Rates are closely tied to the Federal interest rate, so some years will be better than others.

• Low liquidity: Early withdrawal penalties can be steep.
• Interest rates: Rates may not keep pace with inflation, potentially reducing your purchasing power over time.
• Variable rates: You may not lock in the best rate if markets fluctuate.

High-Interest Considerations

While CDs can offer high-interest rates during specific periods, they are often tied to federal interest rates. This can make it difficult to predict the best time to invest.

Worthy Bonds: A High-Interest Alternative

Worthy bonds offer a compelling alternative. They provide consistently high-interest rates independent of the stock market. Additionally, Worthy invests bond proceeds in real estate, a sector known for steady growth.

Choosing Between Bonds and CDs

The best option depends on your goals and risk tolerance.

• Higher potential returns: Consider bonds if you're comfortable with some risk.
• Guaranteed returns and safety: Choose CDs if you prioritize security and guaranteed returns, even if they might be lower.
• Liquidity needs: Worthy bonds offer more flexibility compared to traditional CDs.
• Market conditions: Worthy bonds can offer a hedge against low or fluctuating interest rates.

Ultimately, a diversified portfolio with a mix of bonds and CDs can be a wise strategy.

Build Your Nest Egg with Worthy Bonds 

You’ve worked hard for your money – and making strategic investment decisions can make it work hard for you, too! 

Instead of loaning money to fund a large corporation’s growth, Worthy bonds build community wealth and work in a variety of business investments including CDs, real estate, Treasury bonds, and more. In other words, every bond you invest in is inherently diversified to minimize risk. 

Whether you’re investing $10 or $10,000, take advantage of our 7.0% APY fixed rate interest for massive growth on your initial investment. Get started today in just a few minutes!