9 month CDs are common lengths offered by local banks, credit unions, and other financial institutions. 9 month CDs are certificate of deposit accounts that require an investment length of 9 months. Typically, if the investor withdraws the funds before maturity, a fee or penalty may be imposed. While 9 month CDs may not be right for everyone, they can be a great investment for those wanting to invest in something with low or no risk.
How Does a 9 Month Certificate of Deposit (CD) Work?
9 month CDs work just like other certificate of deposit accounts. An investor should research different financial institutions (and check current CD rates), to find the best offer available. Then, the investor contacts the financial institution (either online or in person), and opens the cd account. Once open, the funds will collect interest at regular compounding intervals, until the full interest yield is achieved at maturity. Maturity on a CD occurs when the time of the deposit account length is achieved (ie, at 9 months for a 9 month CD).
9 Month CDs- Advantages of Opening a Nine Month Certificate of Deposit
9 Month CDs have many advantages that may attract investors. Some of these advantages or benefits include:
- Insured Funds-As long as the financial institution’s CDs are insured by the FDIC, then you will have a very safe investment. This is much safer than investing in stocks, bonds, and other higher-risk investment types.
- Guaranteed Return-Rather than worrying about whether your investment will be profitable or not, you can have confidence and know you will earn a guaranteed return. You can calculate and estimate your exact return before you even sign the papers.
- Higher Interest rate than shorter term CDs–A 9-month CD will often offer higher rates as compared to shorter lengths such as 1, 3, or 6 month terms.
9 Month CDs- Disadvantages of Opening a Nine Month Certificate of Deposit
9-month CDs also have some disadvantages. Some include:
- Return May Be Lower Than Other Investments–While the funds are safe and all-but-guaranteed with CDs, you also must realize that it comes at a price. Stocks are much more risky, but may also offer higher financial rewards. The money you invest in a CD could be money you could be saving by paying off debt at a higher interest rate, or another investment opportunity.
- Interest Rates Are Higher for Longer Term CDs–If you invest in a CD of an even longer period (1 year, 2, years, etc.), then the interest rate is often much higher. So for only an extra 3 month investment, you could gain more money and a higher rate.
- You Cannot Withdraw Funds–While your funds are invested, you cannot typically access them without facing a penalty or fee. And while 9 months isn’t exactly a long time in the world of investing, a lot can happen in that time. If you find yourself strapped for cash, or see an opportunity to do something better with your money, you won’t be able to make a move until the time limit is up.
- CD Interest rates rarely exceed inflation–While the return you will earn is guaranteed and almost completely safe, the interest rates are rarely significantly above current inflation rates. This means your earnings from interest will not greatly increase your spending power.
Conclusion: 9 Month CDs Can Be a Great Invesment
Nine-month certificate of deposit accounts can be a great way to safely earn interest income for a short period of time. The funds are secured, you have an almost guaranteed return and profit, and they won’t tie up your funds for too long. They are great for those wanting the benefits of security and guaranteed money. On the other hand, there may be higher financial rewards with greater risks. Keep reading to learn more about CD lengths.