Kofman says he calls out taxes because “our perspective is always after inflation, after tax, after fees, what’s what you take home?” That’s particularly true once you factor in taxes and inflation. Investors who want a stable, safe asset can almost always get a better return with Treasury debt or corporate bonds. The second, bigger issue Kofman cites is opportunity cost. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now. This isn’t just a low return, it’s a money-losing position. For an investor, this means that they will lock their money up for 12 months while it loses four points’ worth of value. Yet year-over-year inflation is currently around 5.5%. An average 12-month certificate of deposit pays 1.49% interest. The problem with a certificate of deposit is twofold, he says. First, there is the absolute return. “But they’re forgetting that they’re still losing to inflation,” he says. Rising interest rates have certainly drawn attention back to the certificate of deposit and other banking products. Kofman says he understands why someone would to want to put their money in CDs. Are CDs Back? Where Advisors Are Telling Clients to Stash Cash as Rates Rise
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