brokerage CD

[LizBeth]

brokerage CD. when getting a brokerage cd for a year, can the amount you put in lose money over the course of the year and if the time is fulfilled you end up with money you put in and the interest amount when it is all done even if over the course of time you see your amount go from say 100k to 75k with the fluctuation of market.

[marybourg]

1. There is no market fluctuation if you

hold the CD to maturity. You will get your original investment back plus interest.

[LizBeth]

2. ah thank you. i am reading that wording when i check on line

but then i go into my schwabb acct and see my original amount getting lower and lower. the whole point of getting a year CD was safety not losing ANY money or even risk losing by a lower interest. i needed reassurance. i have done CDS but never myself or brokerage CD so needing confirmation i was reading that correctly.

[marybourg]

3. Yes, the lower amount you see is

what you might get if you sold the CD now, before maturity, but if you hold it to maturity you’re good!

[LizBeth]

4. woooosh. i wanted to use someone that knew what they were doing but son

insisted this was better and i would save money, lol. see what happens when we walk into something stupid, lol. thank you.

[kelly1mm]

5. What everyone told you already is true - if you hold to maturity you will get the entire original

investment plus the stated interest.
The way a brokerage CD is different than a 'regular' bank CD is that they can be bought and sold on the secondary market prior to maturity. So what you are seeing is (basically) a 'bid' price for your CD at this moment in time on the secondary market. In rising interest rate environments the 'bid' price will generally be lower than the original investment, thus making the real interest rate higher. In lowering interest rate environments the 'bid' price will be higher than the original investment, thus making the real interest rate close to the current market interest rate.

[LizBeth]

6. ah thank you for that confirmation. i was scared.