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Is a 5.00% CD Better Than Investing With a Broker? Key Factors to Consider

The article from Investopedia discusses the strategy of diversifying investments by putting money into both a Certificate of Deposit (CD) with a 5% interest rate and the stock market. It explains that CDs offer a fixed, predictable return with FDIC insurance, making them a low-risk investment suitable for preserving capital and earning a steady income. Conversely, investing in the stock market through a broker provides the potential for higher returns but comes with greater risk due to market volatility. The article suggests that combining these two types of investments can balance risk and reward, providing stability from CDs while allowing for growth through stocks. It also touches on considerations like the duration of the CD, the need for liquidity, and how one's investment horizon and risk tolerance should guide the allocation between these assets.

Read the Full Investopedia Article at:
[ https://www.investopedia.com/invest-in-both-a-5-percent-cd-and-the-stock-market-with-a-broker-8759085 ]