Boost Your Savings Without Market Risk

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When it comes to investing your money, a wide range of options are available. These opportunities include stocks, bonds, traditional savings accounts, and real estate, all of which offer the potential for financial growth. However, with a plethora of choices also comes the possibility of increased risks.

What if there was an option to invest your money and earn a significant return without any risk? You’d probably think it’s too good to be true. It’s not a myth; it’s called a Share Certificate Account.

What is a Share Certificate Account?

Share certificate accounts (commonly called Certificates of Deposit) are unique savings accounts that earn significantly higher dividend or interest rates than a traditional savings account. The main difference is that your money is inaccessible or locked in for a designated period. You cannot withdraw the funds without incurring a penalty (typically, a portion or all of the interest earned to date).

Share certificate accounts are generally offered by term; the longer your investment, the more you’ll earn. For example, you’ll commonly see certificates displayed in the following manner:

12 Months 1.50%
24 Months 2.00%
36 Months 2.50%
48 Months 3.00%
60 Months 3.50%

Earn Guaranteed Returns

The most appealing aspect of share certificate accounts is that your investment is guaranteed. Once you lock in your rate, it will remain fixed for the duration of your term. As an extra layer of protection, your funds are federally insured up to $250,000 by the National Credit Union Administration (NCUA).

Weighing Your Options

It doesn’t have to be all or nothing when deciding whether to invest your money in the stock market or a share certificate account. Each comes with its own pros and cons, which is why savvy investors typically use a combination of both.

  • Advantages of Share Certificate Accounts:
  • Guaranteed Returns: There is no risk associated with your share certificate account. Plus, you’ll know exactly how much your investment will yield when you open your account.
  • Federally Insured: Your money is federally insured by the National Credit Union Administration (NCUA) up to at least $250,000.
  • Flexible Terms: Choose the term that best fits your financial goals. Terms typically range between one and five years.
  • Higher Returns: Your investment will earn significantly more than other account options, such as traditional savings or money market accounts.
  • Inaccessible Funds: Locking up your money for a fixed period might seem like a drawback to many. However, this feature often helps members to save more money since they can’t spend it frivolously.

Drawbacks of Share Certificate Accounts:

  • Withdrawal Penalties: If you need to access your money, you’ll be required to pay a penalty (usually a portion or all the interest earned to date).
  • Lower Returns: While share certificate accounts earn more than traditional savings and money market accounts, stocks do have the potential to outperform them.
  • Growth Opportunities: If dividend rates increase or inflation spikes, you could be left earning less until your current certificate term expires.

Advantages of the Stock Market:

  • Earning Potential: While the stock market is unpredictable, returns have the potential to be significantly higher than share certificate accounts.
  • Access to Funds: If necessary, you can generally sell stocks and withdraw your money quickly.
  • Diversification: Investing in the stock market allows you to diversify your portfolio across different companies and asset types.
  • Flexibility: Because your funds are not locked in, you can adjust your investment strategy based on market conditions, such as spikes in inflation.

Drawbacks of the Stock Market:

  • Access to Funds: This advantage can also be a drawback. For instance, if the market is down, you might not be able to withdraw your funds without taking a significant financial loss.
  • Higher Risk: Investments in the stock market are considered higher risk and are not guaranteed or insured.
  • Emotional Decisions: Significant fluctuations in the stock market and economy can cause investors to make emotional decisions, which can negatively impact investment returns.

Which Option Is Right for Me?

Choosing whether to invest with a share certificate account, stocks, or a combination of both, can usually be solved by asking three questions.

  • What is your risk tolerance?
  • What are your financial goals?
  • What is your investment timeline?

Share certificate accounts are shorter-term investments that provide guaranteed returns. If you’re unable to take risks or potentially lose money, a certificate could be the best choice. For example, investors nearing retirement often lower their risk exposure by moving stocks into certificates. Or, if you’re saving for a specific goal, like a down payment on a house, you might not want to risk losing money in the market.

The stock market is an excellent option for longer-term investments where market fluctuations won’t significantly affect you in the short term. If you’re younger and saving for retirement, the stock market can increase your earning potential substantially. However, it’s always wise to meet with a financial advisor before committing money to risk-based investments.

We’re Here to Help!

Whether you’re new to investing or a financial guru, share certificate accounts can boost anyone’s savings potential. They’re a staple among diversified investment portfolios and can eliminate risk when the market faces significant fluctuations.

If you’re interested in learning more about share certificate accounts or would like to open an account, we’re here to help. Please stop by any of our convenient branch locations or call 888-777-9982 to speak with a team member today.

Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.


  • This credit union is federally insured by the National Credit Union Administration.

  • Equal Housing Lender

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