The Misconception of CDs as Investments The notion that certificates of deposit (CDs) are investments is a common misconception, particularly given their characteristics.
While CDs offer a low risk way to earn interest on deposits, they don't fit the mold of traditional investments like stocks or bonds. In many respects, CDs operate more like savings accounts than investment vehicles.
The returns are guaranteed, and the principal is protected up to $250,000 per depositor, per institution. This guarantee comes with a trade off: low returns compared to other asset classes.