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Opening a CD with an APY of 4.9%?

Say for instance, I wanted to place $5000 into a CD for 60 months (5 years) at a APY of 4.90%.

How much would I have in 5 years??

More than $6125. You multiple 5000 x 4.9 for the first year.

Then you add that amount and multiple again by 4.9 , for the 2nd, 3rd, 4th, and 5th year.

You will be required to pay tax's on the interest earned. so after tax's you will end up with about $980 or a total of 5980. Once you subtract the inflation rate or 3 percent a year, your $5980 will be lucky to have the same purchasing power you have now.

I would suggest you pay off any and all loans and credit cards. I would then invest $1000 in a mutual fund, and add $100 per month via a bank authorization. I would then put 1000 into a 6 mo cd, 1000 into a 12 month cd, and 1000 in a 18 month cd.

Please keep in mind, if you cash in your cd before its maturity date, the bank will charge you an early penalty withdrawal fee.

Its the old saying, the greater the risk, the greater the reward, or the longer the bank can keep your money, the better interest rate.

I can assure you that your bank will take your money and invest it in something where they can make money for themselves, and give you a small return via interest.

Good Luck

You'd have about $6,350 at the end of five years.

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