7 Reasons to Open a Certificate
Finding safe and reliable investment options can be a challenging task, especially during times of financial uncertainty. However, one option that is often overlooked is certificates, also known as share certificates in the credit union space. Certificates are a low-risk investment option that offers several benefits for investors.
Let’s cover why certificates make sense – and why you should add them to your investment portfolio.
1. Safety and Security
One of the primary reasons why certificates make a lot sense is the safety and security they provide. Unlike stocks or mutual funds, which can be subject to market volatility, certificates offer a guaranteed return on your investment.
When you open a certificate, you are essentially lending money to a credit or financial institution for a specific period, and in return, they promise to pay you back the principal amount along with the agreed-upon interest or dividends.
2. Fixed Interest Rates
Certificates are often an attractive option for investors because they feature fixed dividend rates. Unlike other investment options, such as bonds, stocks, and mutual funds, where interest rates can fluctuate, certificates provide a fixed rate of return for the entire duration of the investment term. This enables you to accurately calculate your potential earnings and accordingly plan your finances.
3. Flexible Investment Terms
Certificates come with various investment terms ranging from a few months to several years. This flexibility enables you to choose a term that aligns with your financial goals and liquidity needs.
For short-term goals, individuals can opt for certificates with shorter terms, while long-term goals can be supported by certificates with longer maturation periods. This flexibility enables you to tailor your certificates to meet specific requirements.
4. Diversify Savings
Diversifying your investment portfolio is crucial for managing risk and maximizing returns on your savings. Certificates offer an excellent opportunity for diversification. By including certificates, you can balance out the potential volatility of other investments, such as stocks or real estate. This diversification strategy can help reduce the overall risk of your portfolio and provide a more stable source of income.
5. Easy to Open and Manage
Opening a certificate account is typically an easy process that can be done online, by phone, or at your local credit union branch. Certificates also often have a low minimum deposit requirement, making them accessible for a wide range of consumers.
6. Low Fees and Expenses
Compared to other investment options, certificates have minimal fees and expenses associated with them. Unlike mutual funds or brokerage accounts that may have management fees or transaction costs, the fees for certificates are typically low. This helps ensure that the majority of your investment goes toward earning interest rather than being eaten up by fees.
7. Ideal for Emergency Funds and Goals
Building an emergency fund is an essential part of financial planning. Certificates can be an excellent option for storing your emergency fund or saving toward your financial goals.
The safety and guaranteed returns of certificates make them a reliable choice for these purposes. Moreover, some financial institutions offer penalty-free access to a portion of the principal in case of an emergency, providing a degree of liquidity for unexpected expenses.
Final Thoughts
Certificates are a smart investment option for individuals looking for safety, stability, and predictable returns. Due to fixed dividend rates, flexible investment terms, and easy management, certificates can offer a low-risk way to diversify your portfolio and achieve your financial goals.
Save Up. Way Up. Open a Peak Certificate Today.
You deserve to earn more with your money. A Peak certificate is a great way to build your savings effectively and safely. Choose from 7-, 13-, 19-, and 25-month terms and with the opportunity to earn up to 4.00% APY*, sit back and earn Peak savings. For more information, visit our Certificates page.
*APY = Annual Percentage Yield.
Promotional Share Certificates: The 7, 13, 19, and 25-month promotional rate terms will revert to the non-promotional 6, 12, 18, and 24-month terms, respectively, upon maturity. A grace period of 7 days applies.
Rates, terms, and conditions are subject to change. Fees may reduce earnings. The terms applicable to your Share Accounts at Peak are provided in the Membership and Account Agreement. Prime/Regular Savings requires $100 minimum daily balance to earn dividends. Other savings may not require a minimum balance to earn dividends. Minimum balance to open a certificate is $500. Dividends are calculated by the daily balance method which applies a daily periodic rate to the balance in the account each day. Dividends are compounded monthly and will be credited monthly. The Annual Percentage Yield on Share Certificates assumes dividends will remain on deposit until maturity. A penalty may be imposed for early withdrawal and will impact earnings on the account. You must be a Peak member to qualify. Upon maturity, your certificate will automatically renew at the current rate if not closed. IRA Certificates cannot be withdrawn and moved into a non-IRA product without potential penalties from the Internal Revenue Service. Check with your tax advisor for specific IRS rules, advice, and tax deductibility on your IRA. For details, please contact Peak Credit Union at (800) 258-3115.