When it comes to saving for retirement, financial planners generally agree that the final stages of the race -often called "pretirement" — are no time to take undue risks. So as you approach retirement, you might consider putting more of your savings into places that are likely to help protect you from exposure to sudden reversals in the financial markets. One of those places is bank certificates of deposit, and here are three reasons Ally Bank CDs may make sense for you.
Reason no. 1: Reduced Risk
Bank certificates of deposit (CDs) can be a good choice for this stage of your retirement savings because they generally provide a fixed rate of return and your funds are insured by the Federal Deposit Insurance Corporation (FDIC) up to the maximum allowed by law.
Many financial experts also note that CDs can be held in individual retirement accounts to provide additional benefits. "Having CDs in a Roth IRA is a great option for people in and planning for retirement, since it gives you tax-free growth at higher rates with a reduced risk," noted Fred Amrein, the principal certified financial planner at Amrein Financial in Wynnewood, PA, during an interview with Ally Bank, which offers IRA CDs.
Reason no. 2: Ally Bank CD APYs Are Consistently Competitive
When choosing CDs, you'll want to consider both the annual percentage yield (APY) and the term, or the amount of time before the CD matures. At Ally Bank, our CDs consistently offer some of the most competitive rates in the country, based on rates published by Bankrate.com. Plus, there's no minimum opening deposit or monthly maintenance fees.
Before you sign on for any bank certificates of deposit, financial planners caution that you should be fairly certain you're not going to need your money early, or that the early-withdrawal penalty isn't too stiff.
Early-withdrawal penalties are almost always a part of a bank's CD offering, but there's no limit on what the bank can set as the early withdrawal penalty. So if there's even a remote possibility you'll need to make an early withdrawal, consider the Ally Bank No Penalty CD. With it, you can withdraw all your money — including interest — after the standard waiting period, which ends on the sixth day after you fund your account.
Reason no. 3: Daily Compounding in Ally Bank Certificates of Deposit Maximizes Growth
You may also want to keep an eye on how often your interest compounds, or how it's added back in to your account and becomes part of a fuller base. The more compounding, the better: With each round, you're earning interest on your interest, which is the way your money really starts to grow.
Ally Bank certificates of deposit compound daily at rates that are backed by our Ally Ten Day Best Rate Guarantee: When you fund your CD within 10 days of opening or renewing your CD, you'll automatically get the best rate we offer during those 10 days (starting with your open or renewal date).
In addition, Ally Bank offers the Raise Your Rate CD, which provides the option of increasing your rate once with a Raise Your Rate 2-Year CD or twice with a Raise Your Rate 4-Year CD if our rate on this CD goes up for the term of your CD.
If you think Ally Bank CDs might make sense for you, you can open and fund a CD with any amount, or get more information, at Allybank.com or by calling the 24/7 customer-care line at 877-247-ALLY (2559).