A CD bond is a combination of a certificate of deposit and a bond. A certificate of deposit (which is often shortened to a CD) can be converted into a bond. When the two investments are combined the risk is a little bit higher than it would be if you were to buy a certificate of deposit on its own. This kind of deposit provides the happy medium between a CD and stocks.
If you like to invest and like to live on the edge just a little then you may find that a CD does not get you out of your comfort zone. On the other hand buying stocks represents the ultimate risk in the investment game. A CD bond offers enough risk to make investing exciting but not enough to have you wanting to pull your hair out in fear. It is the perfect equalizer between a safe and a not-so-safe investment opportunity.
A CD is an investment product you purchase from a financial institution. You agree to let the bank use a predetermined amount of money for a particular span of time such as six months or a year. In exchange you as the investor will earn interest on the CD. The longer the maturation period is, the more you will earn.
A bond on the other hand is defined as “a fixed interest financial asset issued by governments, companies, banks, public utilities and other large entities.” A bond pays to the bearer (who is the person that started the bond and whose name it is under) a fixed amount of interest after a specified date. There are different types of bonds.
The two most common types are the discount bond and the coupon bond. When you purchase a discount bond the money will be paid out to you at the ending date. A coupon bond is slightly different. It pays out the fixed amount of money over a specified interval of time such as a month, a few months or a year, etc. It also pays you out a fixed amount of money once the end date rolls around.
If you are shopping for a new type of investment and have graduated from regular certificates of deposit but are not fearless enough to dive into the risky waters of the stock market just yet then you should try something that is in between- the CD bond. Do some research over the Internet and at your financial institution and get familiar with the combination of a certificate of deposit and a bond before you buy one.