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With all trading halted in New York City on Tuesday, some may be wondering where to invest money aside from the stock exchanges. Here are a few options to consider:
- Certificates of deposit (CDs): A certificate of deposit is an investment tool that allows financial institutions to borrow funds for a predetermined period of time (typically six months to five years) while paying back interest to the investment. Since CD funds are not liquid, institutions pay higher interest rates than savings accounts, though they are just as easy to open at a local bank or credit union. CDs are deemed low-risk investments because they are federally-insured for up to $250,000.
- Money markets: Money markets are investments that allow individuals to buy shares; however, these shares are safer than stocks because they rarely fluctuate. Unlike CDs, which offer higher interest for investing money over a longer period of time, money markets reward individuals who invest larger sums of money. Money markets also offer liquidity through a checkbook, making them similar to checking accounts. Funds added to a money market account are federally insured for up to $250,000.
- Life insurance annuities: Many people don’t consider life insurance as an investment option, but with a life insurance annuity, you can invest premium payments on a tax-deferred basis. Later in life, those premium payments are returned to you in increments or a lump sum.
While many banks and insurance companies along the east coast are likely closed today, individuals living in other parts of the country may be able to invest using these avenues while waiting for the stock exchanges to reopen.