• Long-term CDs present a greater opportunity for higher interest earnings.
• Savers should consider their financial goals and timelines before investing.
• Experts advise against delaying CD investments due to potential rate changes.
• Maintaining an emergency fund is critical before committing large sums to CDs.
• Using a CD ladder can enhance liquidity while maximizing returns.

The landscape of certificate of deposit (CD) accounts has evolved significantly for savers, particularly as inflation has moderated and interest rates responded accordingly toward the end of 2024. As noted by experts, “Rates are better than they were five years ago but not as good as one year ago,” said Patti Brennan, president and CEO of Key Financial. However, CD rates still offer attractive returns, and savvy savers can capitalize on this opportunity to maximize their investments in 2025.

In light of these changes, it is essential to understand how much to invest in long-term CDs. It is crucial to assess your financial goals and the timeline for access to these funds. Knowing the purpose for your savings can greatly influence your decision-making process. For instance, planning for a wedding or a child's college education might dictate how much you should deposit into a long-term CD this January, as highlighted by experts from CBS News.

Additionally, it is important to calculate your deposit wisely. Krisstin Petersmarck, president and founder at New Horizon Retirement Solutions, emphasizes that, “Consider the money that you deposit as inaccessible.” Early withdrawal penalties can wipe out most or all of the interest earned, and savers should ensure they have a robust emergency fund in place before committing large sums to a CD account. As noted, “Make sure you have other funds available for those unexpected or emergency costs,” cautions Petersmarck.

Furthermore, rather than waiting for potential future rate increases, which are not guaranteed, experts recommend locking in the best current rates. This approach is paramount as the pace of interest rate changes slows down. According to financial trends outlined in a recent analysis by CBS News, we should not expect rates to rebound significantly soon, making a long-term CD a prudent option.

Another strategic move is to consider a CD laddering strategy. This involves staggering investments across various CD terms to provide both flexibility and access to funds as they mature. “The idea behind this strategy is to provide you with some liquidity early if needed,” explains Harmon Kong, co-founder of Apriem Advisors. This method can protect against future rate decreases while still allowing access to cash for immediate financial needs.

Ultimately, the approach to investing in CDs relies on various personal circumstances and financial goals. However, by following expert advice—such as prioritizing long-term investments, avoiding excessive reliance on variable savings accounts, and maintaining adequate liquidity—a strategic investment in CDs can yield substantial returns. For more tailored advice, consider consulting a financial advisor to navigate your unique situation.

For further insights, you can check the original articles on how much to invest in CDs and the dos and don'ts of CD accounts.