Should you buy a CD or a bond?

In some situations, CDs may be the better choice for shorter-term goals, while bonds may be part of a longer-term strategy. CDs don’t increase in value as bonds could when interest rates fall, although CDs would pay the established higher interest rate for the duration of their term.

What is the difference between a bond and a CD?

Bonds also expose investors to both interest rate risk (how a bond’s value responds to a rise or fall in interest rates) and credit risk (the issuer’s creditworthiness). In contrast, CDs have little risk to the principal. Rates. CDs may offer slightly higher annual percentage yields (APYs) than a typical savings account.

Is a CD a good investment?

Both certificates of deposit (CDs) and bonds are considered safe-haven investments with modest returns and low risk. When interest rates are high, a CD may yield a better return than a bond. When interest rates are low, a bond may be the higher-paying investment.