Market index linked CDs

The current financial crisis is fairly terrifying. Most of us have some sort of money tied up in the market, and if we don't then our jobs and retirement funds are linked to the economy in a way that should make all of us a little scared. The stock market goes up and down by the hour and many people are loosing thousands of dollars. So what kind of approach should you take to the current situation? Should you panic and pull all of your money out of the market? This would probably be a very bad idea. You need to know that panic is one of the things we truly need to worry about. Economic crises are not always caused by fear, but they become real crises because of fear. What we need to do is to develop some knowledge of the economy and find some way to develop that knowledge and use it. We need to learn about the different parts of the economy and the stock market. One part of the economy that many of us should know about is the market index linked CD or MILCs.

A market index linked CD allows you to invest with some sort of piece of mind. This is because the United States government actually protects your investment.

This is quite different than just about any other stock or bond. The CD itself is insured by the FDIC, just like your money in a bank. There is no guarantee that the CD will make money, but there is a guarantee that you will get back at least the full cost of the CD when it is returned. A market index linked CD pays off in one lump sum at one time. Every market index linked CD is connected to a particular reference index. If that particular reference index appreciates then the market CD appreciates as well. If it slows down then so does the CD, although this does not mean that you would loose money on the investment. One reason why market linked CDs are a good investment option is that the markets they are based on often are quite diverse. As most of us know, diversifying is a critical function of any good financial plan. You can't just put all of your money into a single investment. That could be truly disastrous. If that one investment goes then you loose everything. A market index linked CD could allow you to base your investment on an entire market and not just on a single company or product. The diversity of the market could allow your market linked CD to make a decent return over the long run.

In such uncertain economic times we need to be very careful about our investments. A market linked CD could be a great investment in such uncertain times because it is actually secured by the government. However, you should also be sure to know that during a time when the market is so unstable, there is some chance that the markets linked to your CD will suffer, meaning that the CD would make no money. It would not loose money, but it might not make anything. So before you invest in anything you should take a careful look at the particular market that you want to invest in. Consult an expert and see what they have to say. Don't just assume that an market linked CD is a good idea because of the safety of the FDIC. Consult a financial expert and be prepared to wait for quite a while before your investment pays back.