How does investing in a CD work?
Min. deposit of $5k @ 0.75% for 8 months for a CD. I don’t know much about investing or how percentages work. How do you do the math to figure out how much u can make out of interest. Also besides this what is the best way to invest money at your local bank to maximize interest and how long does it need to stay in that account to accrue interest? @ $5k how long would it take to double?
$5,000 * [1 + (.75% / 8)] ^ (8 * (8/12)) = $5,025.05
This is your principle ($5,000) times 1 plus the interest rate (.75%) divided by the number of interest payments (8). The part in brackets is raised by the number of interest payments times the length of the investment in years (8/12).
You can’t make much money in CD right now because interest rates are so low. A CD is usually going to be the highest yield you can get at your local bank without having any risk of losing your money (as long as the bank is FDIC insured).
With $5,000 at .75% it would take about 92.5 years to double your money. However, usually the longer you are willing to take out a CD for the higher the rate will be. So, .75% on a very long term investment isn’t realistic.
Credits, Stocks & Pension : How Does a Bank CD Work?