I recently read an article promoting the benefits of putting money into a CD before the Federal Reserve meeting in early November. The premise of the article was that if the Federal Reserve continues to lower rates, CD rates will also likely follow suit, so locking in rates now could benefit you. It certainly makes sense that if you are considering putting money into a CD, doing so before rates decline is advantageous. That begs the question- does it make it the best thing for you to do?
We are inundated with investment ideas with headlines that capture our attention to ‘Do This Now’ or ‘Top Tips for Today’s Market’. As investors it’s tempting to act on this ‘advice’ but before long our portfolio starts looking like a buffet plate. We have a bunch of different investments, but we don’t know their purpose or if they even work together.
Before making any investment decision, it’s best to start with your overarching financial plan, which will lay out which investment type should be used for all your goals. Having this ahead of time will make these decisions much easier. Generally, short term goals should be funded with short term investments, like CD’s. Longer term goals may use combination of stocks and bonds. So, before rushing into the hottest investment idea, review your financial plan and chose investments that match the timeline for your goal.
