Question About Investment CD's?

I have no experience in investing money into CD's. I found one place that offers an annual yield rate of 3.65%. So, I want to invest $500 into this CD.

Can someone tell me how this works?

I'm supposed to get monthly interest deposits into my personal bank account. (I'm hoping to turn around and re-invest the interest, when I have enough to do another $500.)

Anyway, I know there has to be some smart people out there who can explain this to me, explain what kind of monthly interest I'm looking at, and basically how this all works.

I'm honestly trying to find a way to save some money, make a little money, and keep money out of easy reach.

Best and most information gets the points.

Thanks in advance for your help.

To correct the first answer, anything that pays a return is an investment. A CD can be a good introduction to the world of investing. For $500 at 3.65%, you're looking at interest earnings of around $1.50 per month. If you are interested in reinvesting the interest, I would recommend having the bank set it up that way. Instead of the interest being deposited into your regular account, most banks will allow you to have the interest added to your CD, therefore earning you interest upon the interest.

After a year, your CD may be worth around $520 dollars, depending on how the bank "compounds" the interest.

Here is a good F.A.Q. on how CDs work:
http://www.bankrate.com/clvd/news/sav/20...

CD's aren't an investment. They are just a place to hold your money. When you open a CD, you are agreeing to lend the bank money for a set period of time. The bank pays you monthly interest for your money. If you try to take it out early, you have to pay a penalty. If you want to save money, I would suggest a mutual fund. You can probably start that right through your bank and automatically invest a little money each month.

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13% annual interest is guaranteed
I have such account.
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Good luck!

A CD is basically just a savings account except that you can't remove the money anytime that you want. You have to leave it for the term of the CD or you will be charged penalties to get it back. If you leave it until the CD matures, then you'll get all of your original money back plus the interest.

In return for tying up your money for the specified time, you get a little better interest rate than in a regular savings account.

You won't make a lot of interest on $500. You don't mention the term of the CD or if the interest is simple or compound. Simple interest of 3.65% on $500 is $18.25 a year. If the interest is compounded monthly, then you'll make a little more.

when you put money into a CD, it's locked up for the term of the CD, whether it's for 3 months or 60 months or more. there are normally penalties for cashing out your CD before the end of the term, and the penalties vary from bank to bank. if the CD term is short enough your entire interest may be wiped out; if you have to cash in a longer term CD the bank may penalize you 3 months' interest or more.

$500 at 3.65%/year is $18.25, which should be credited to you monthly at about $1.52 a month. some banks may send you a statement monthly; others quarterly.

what you will want to do is see how the rates vary according to length of time and then decide how long it's worth tying up your money for. and you can also time your additional deposits to roll over at a schedule that works for you, like all at once or every set number of months...