The aim of investing for an individual non-professional investor should be to seek out the highest returns possible with the least amount of complexity. Index funds and Exchange Traded Funds are good ways to do this in the stock market, but there are other good investment vehicles available out side of the stock market, as well. One example of this would be a Certificate of Deposit, commonly known as a CD.

CDs come in many shapes and sizes, and are available to just about everyone regardless of the amount of money they have to invest. A CD is a short-term investment vehicle that offers a higher interest rate than the typical savings account, in return for locking up you money for a predefined period of time. Usually, a CDs maturity period (the amount of time your money is locked up) range anywhere from 1 month up to 6 years. Typically, you will earn a higher interest rate the longer you are willing to lock your money in.

CDs are available at just about every bank and credit union in the United States. These CDs will be FDIC insured up to $100,000 just as any savings account in the US. There is usually some minimum amount of money that must be made into a CD, and there is usually a penalty for withdrawing money from a CD early.

Besides the CDs available from US banks, there are also International Certificates of Deposit. Banks that offer International CDs usually require a significantly higher minimum deposit than those typically available within the US. Also, International CDs are not insured by the FDIC, so are considerably riskier than US based CDs.

There are some significant advantages to investing in International CDs, however. The primary reason to opt for an International CD is that most offer much higher interest rates than typically available in this country, primarily because of the increased risk. Also, if you invest in a “tax-haven” country such as Panama you will not be required to pay taxes on the interest earned on this CD.

Certificates of Deposit can offer an excellent short-term investment vehicle for individual investors. This is particularly true for those who have large sums of money to invest and will not have a need to use that money for any particular purpose during the maturity period of the CD. The high interest and relatively low risk of CDs offer a very compelling investment choice.