What is a Certificate Account and Why You Should Get One
What is your plan for saving money and preparing for the future? Is your financial plan solid and comprehensive? As you strive for financial security, you've likely heard of something called a certificate account—but you may not be clear about what it is exactly. That's ok, you're not alone. Certificate accounts, while incredibly valuable, are not often discussed among friends, family, or even some financial advisors.
What is a certificate account?
Let’s break it down. Fundamentally, certificate accounts are a great way to earn competitive dividends on low-risk, long-term investments. It’s an incredible tool to help you effectively invest money in a safe way. Set aside funds for a designated period of time—usually between 6 and 60 months—and in return, you receive a higher dividend rate than with a traditional savings account. You’ll typically find that your savings is able to grow faster if it’s in a certificate account than if it’s in a traditional savings account.
Why you should get one
If you’ve ever found yourself hesitant to invest money in the past, this is the perfect option for you. Certificate accounts resolve most of the discomfort that comes with some of the traditional styles of investing. Unlike stocks, whose amounts can go up and down, money put into a certificate amount will only grow. The amount will never decrease. Additionally, some financial institutions insure certificate accounts, giving you the peace of mind that, if something goes south, your money is safe and you don’t need to worry.
The financial experts at Mountain America Credit Union advise, “Using a certificate account to build savings is a great move for your financial future. It provides the unique opportunity to enjoy all of the benefits of investing without the risk, and is certainly something worth sitting down with a personal banker to discuss.”
The higher dividend rates make certificates ideal for a variety of savings options. Set aside a small amount and let it grow, then use it during the years when you need it the most. Think of it like a retirement 401(k) or Roth IRA, only you decide the deposit amount and term length. This is a great option if you’re looking for new ways to save and prepare for the future in a way that is safe and secure. Keep in mind that this doesn’t necessarily replace your 401(k) or Roth IRA, it can simply be regarded as an extension of your retirement planning. It never hurts to give yourself a little extra!
Even if retirement isn't your immediate concern, certificates are a great way to accrue more interest for whatever future expense you feel is deserving of time and saving. Set it and forget it for up to 60 months—then simply roll it over into a new certificate and watch it continue to grow. A certificate account is an incredible tool that can be used a number of ways. Consider also using it to help you save money for other important financial goals, such as a down payment on a new car, your dream home, or the arrival of a new family member. Whatever your milestone financial goals are, this is a great way to set aside some money and watch it grow.
Certificates are perfect for those looking to save without the hassle of constantly monitoring an account. With so many accounts providing the ability to set up autopay, many have found how wonderful it is to set up a payment and not have to think about it. The point is simple: once money is deposited into the account, it's meant to remain there, totally untouched for the life of the certificate so it can earn the highest possible interest. Whatever your goals may be, certificates can help you reach them. Just visit your financial institution’s nearest branch and choose a certificate length—anywhere from 6 to 60 months. It’s easy to set up a certificate account to meet your specific needs so that you can more effectively reach your financial goals.
It’s so easy to set up
There is a negative connotation around investing that suggests it can be complicated and intimidating. When it comes to certificate accounts, this couldn’t be further from the truth. Setting up a certificate account is incredibly simple to do. Go to the local branch of your bank or credit union and a personal banker can help you get everything set up. Once you've started the account, you don't have to do anything until it reaches its maturity date. You don't make any deposits or set up any withdrawals, and most importantly, it’s worry-free because the dividend rate is locked in place. That means your certificate won't fall victim to hostile stock market falls like it can in other savings or investment accounts. This is the perfect savings option for someone looking to maintain peace of mind while still taking advantage of opportunities to help your money grow. Investing doesn’t have to be stressful or complicated.
Need a little more flexibility?
If you like the idea of a certificate, but you want to add money to your account along the way, check out something new from Mountain America Credit Union. The Growth Certificate account allows you to still get all the options, while continuing to add funds anytime. You can even automate the deposits so you don’t have to remember to make them each time. That way, if you have some extra money you’d like to put toward your future, you can continually add it to your growth certificate account.
We understand that investing can be a touchy subject, but setting aside money for your future doesn’t have to be stressful or time consuming. Setting up a certificate account is the perfect way to save your money, let it grow, and maintain peace of mind. Make certificates part of your broader investment strategy today!
