CDs vs. bonds: How they compare and which is right for you

	CDs	Bonds
Issuer	Banks or credit unions	Governments, municipalities or corporations
Purchase method	Purchased individually	Purchased individually or as part of an ETF or mutual fund
Term lengths	Months to years	Years to decades
Rate of return	Fixed rate with compounding interest (most common)	Fixed rate with regular interest payments (most common)
Safety	With CDs that are covered by the FDIC or NCUA, funds are insured up to $250,000 per depositor, per insured bank, for each account ownership category.	Treasurys and U.S. savings bonds are backed by the federal government, so they are very low risk.Corporate bonds are backed by each issuer and carry the risk of losing principal if the company defaults. It’s best practice to target corporate bonds from issuers with high credit ratings.Municipal bonds are backed by the city, county, state or other municipality that issued them. While generally safe, these bonds could go into default if the issuer files bankruptcy.
Minimum investment requirements	Varies by issuer but generally ranges from $0 to $2,500.	Individual bonds usually start at $1,000.
Liquidity	Most CDs carry early withdrawal penalties, typically 90 to 180 days’ worth of interest.	Bonds have maturity dates, but most can be sold sooner on secondary markets.

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