A five-year CD paying 4.50% locks your money up until August 2031. That's 1,826 days from now. The S&P 500 has returned an average of 10.26% annually over the past century, but sure, let's celebrate the financial equivalent of hiding cash in your mattress because numbers go up and down and that makes you feel scared.
The article promises this will help with a long-term savings goal. Know what else helps with long-term savings goals? Compound growth. Time in the market. Basic arithmetic. But those concepts require you to not panic-sell every time Jim Cramer screams into a camera, so here we are, applauding a product designed for people who think five years counts as long-term thinking.
Banks love this product. They get to use your money for half a decade while paying you less than half what equities return. They'll lever it up, lend it out at 8%, and send you a statement every quarter reminding you that you're earning 4.50% like that's supposed to feel good. You're essentially giving them an interest-free loan in exchange for the privilege of underperforming inflation after taxes.
The best part? If rates go up next year, you're stuck. If you need the money for an emergency, you'll pay a penalty that wipes out two years of interest. If a better opportunity comes along, tough luck. You clicked "I Agree" on a contract that turns your capital into a time-locked hostage situation because someone on Reddit told you volatility was the enemy.
Five years is longer than most marriages these days, but at least divorce lets you access your assets.
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