People who prefer to invest their money in risk-free deposit account options tend to look at the standard banking products - high interest savings accounts, CDs, money market deposit accounts, IRAs, etc. Some may get a little creative and look into annuities. If you feel the need to have an equity-indexed annuity type of investment in your portfolio, chances are you would be interested in a little known investment called an equity-linked certificate of deposit. It’s a lower cost alternative to annuities that allows you the peace of mind of having your principal deposit guaranteed by the Government yet still benefit from the growth of the market index.

Insurance agents selling equity-indexed annuities get up to 13% commissions! They often pitch these annuities to seniors because of their general risk avoidance tendencies, but some people lose out big time financially if they need to pull their money out sooner than planned. In addition to losing the 13% commission paid to the agent, people who must surrender their policies early end up paying steep surrender penalties and various fees to access their money.

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Let’s look at what types are available to you.

First we have what they call a traditional CD. With a traditional CD you would deposit a set amount of money for a set term with a predetermined interest rate. You can either cash the CD when it matures or you can roll it over for a second term. Pretty much every financial institution will let you add extra funds during the term of the CD or at the point of roll over.

Next we have what is called a bump-up CD. With a bump-up CD you can take advantage of the rising rates. An example of this would be if your bank offered a set rate for a 2 year CD and the interest rate rose any additional points you would have the option of telling the bank you want to add the extra percentage for the term of the CD.

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The stock market can be an intimidating place to make an investment because of all the special jargon that is used. A broker can also be just as scary especially if you know little or nothing about the stock market. Keep in mind though nobody started out knowing everything about the stock market and making investments. They all had to start from the beginning and learn the ropes.

The first step you need to take when looking to make a solid investment is to start with the basics. You can do this in a number of ways. First you have the local bookstore as well as the local library. The Wall Street Journal is specifically aimed at professional investors but there are many pieces written for people who are just starting out. You can grab a copy of any newspapers that may show the stocks in it and look at the letters and numbers. They surely looked crazy and mixed up but pay close attention for a week or two. Follow the stocks and see which ones can be a great investment for the future. You can even go online and see the history of the stock over the last year or more.

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