What is the difference between a CD and a bond?

While CDs and bonds have various similarities — both are low-risk investments that often earn a fixed rate — there are several differences that can factor in when you’re choosing between the two: Generally, both CDs and bonds can be safe investments.

Are municipal bonds better than CDs?

Due to their tax advantages, federal and municipal bonds will leave you with more money in your pocket than a CD offering the exact same interest rate. The difference will be most pronounced for investors in high tax brackets. Be sure to calculate the after-tax returns of bonds and CDs when comparing your options.

How do I choose between CDs and bonds?

Knowing how to choose between CDs or bonds requires the investor to understand both the investments and his or her requirements. A certificate of deposit, or CD, is a type of investment product typically offered by a bank or credit union. Investment firms also offer brokered CDs that can be purchased though an investment account.