Stocks Vs CDs

Stocks vs. CD'S, which one is the better investment? Here I have put together a list of reasons, which explain, why putting your money in the stock market is better than putting it into a CD.

1 Stocks give you financial freedom. We all know that CD's are safer than stocks. This is a guaranteed return. We also know that earning 3-5% on your money is never going to make you financially free. Unless you already have millions to invest it is not really going to pay out much.

2 Stocks make larger returns. When you put your money in a CD you may only earn 3-5% a year. Yet there are hundreds of people who have been able to make over 100% return on their money year after year. Let's tune it down. Say you take a few months to learn about trading. You get to the point where you can make an average of 20% off your money every year. Now what lets compare?

You put $5,000 in a CD for 10 years at 5% you would have $8,144. OK, so you made a profit. What if, however you took that same money and invested it to earn an average of 20% a year after 10 years you would have $30,958. Now that was worth your time?

3 Another disadvantage with a CD is that you can't pull your money out. If you put your money in a 1 year CD you can't pull it out for 1 year. Or pay penalties if you do. Who wants to pay penalties? What if you need the money now? Had you invested in the stock market you would be able to pull it out instantly.

4 Banks invest your money. Now let's look at this scenario. You are in a super market. You have $5. There is a whole chicken you can buy with that $5. You really like chicken and you want to buy it. Your friend Bob on the other hand tell you that he will give you a piece of this chicken if you give him your $5.

Would you take this offer? Probably not, so why would you let the banks give you the same deal? When you put money into a Bank's CD what do they do? They take that money and invest it. They put your $5,000 in the market, make $500 off it and give you your money back plus maybe $200. They get a free $300 from you.

5 Inflation hits you hard if you invest in a CD. If you put $5,000 into a CD at 3% for 1 year you would have $5,150. Did you make any money? Think about it, if inflation is 3% your money would lose just as much value as it gained. In other words your $5,150 would have the exact same buying power today as your $5,000 did a year ago. Inflation makes it hard for CD holders to make a profit.

In a, stocks vs. CD completion stocks are the obvious winners.

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