Share certificates might be one of the best wealth-building tools you’ve never heard of. When it comes to investment products, most of the attention goes to popular options like stocks, bonds, IRAs, and mutual funds. Now to be fair, each of those products offers benefits that make them worthy of consideration. However, due to their unique set of financial perks, we’d like to make the case that share certificates also deserve a spot in your investment portfolio. Which brings us to the question: What is a share certificate?
What is a Share Certificate
While “share certificate” may not be a familiar term, you’ve probably heard of a Certificate of Deposit (more commonly known as a CD), right? Well, a CD and a share certificate are essentially the same product. The main difference is that CDs are issued by banks and share certificates are issued by credit unions. Both products are easy to obtain and offer perks that include guaranteed return rates, low deposit requirements, multiple term options, and the security of federal insurance. Need a little more detail to decide whether share certificates are right for you? Let’s take a closer look at the list of benefits:
4 Benefits of Investing in Share Certificates
- Guaranteed Rate of Return
Conventional wisdom suggests that there’s no such thing as a sure thing. But in the world of investments, share certificates are as close as you can get. Before you invest your money in a share certificate, you choose the amount, term, and rate. Once you deposit the funds, the deal is set. As long as you don’t withdraw your money before the agreed-upon term, you can count on receiving the full dividend when your certificate matures. - Multiple Term Options
Share certificates often offer terms ranging from 6 to 48 months. When you agree to a specific term, you essentially give up the ability to access that money for a set period. In exchange, the credit union guarantees a dividend rate that is usually higher than what you can get from a basic savings account. In most cases, the longer your term, the higher your return on investment. - Low Deposit Requirements
While many investment products or accounts require substantial initial deposits, share certificates can often be opened with as little as $500. By offering a more accessible point of entry, share certificates stand out as an excellent option for new investors who may not be able to commit large amounts of money to their initial investments. Additionally, seasoned stockholders can use share certificates to diversify and stabilize more aggressive investment strategies. - Federally Insured
When you place your money in a share certificate, you can rest assured that your money is safe. In fact, the US government guarantees it. Just like the Federal Deposit Insurance Corporation (FDIC) insures CDs from banks, the National Credit Union Administration (NCUA) insures share certificates for up to $250,000. Since share certificates are backed by the full faith and credit of the United States government, you can make your investment with confidence.
With so much going for them, share certificates are one of the most attractive investment products credit unions offer to their members. The combination of higher dividend rates and guaranteed returns make them an ideal option for anyone looking to maximize their money. But as with most financial products, it’s a good idea to look at your budget before opening a share certificate account.
Since you won’t be able to access the deposited funds for a pre-selected term, be sure you only invest money you can afford to do without for at least the length of the certificate agreement. The good news is that even though you won’t be able to withdraw the funds before the term is finished (at least not without incurring a substantial penalty), you’ll have more money when the certificate matures than when you started. And isn’t that the goal of investing in the first place?
Spero: Your Trusted Source for Share Certificates
If you’re ready to begin investing in term share certificates, Spero offers a wide variety of options. With standard share certificates with terms ranging from 6 to 48 months, Save-To-Win share certificates that offer the chance for additional earnings, and Junior Share Certificates designed to help our youngest members establish a solid financial foundation, we’re confident we have the right option for you. To learn more or open a term share certificate account, stop by one of our convenient branch locations today and speak with an Spero team member today!
