Saving Up for a New Business

When starting your own business, one of the most important factors is financing - not just having the money to get things up and running, but making sure that you have enough to fuel your own living expenses and other bills, especially when you're just starting up. CDs can offer good returns with low risk.
From: Alex Summers
July 9th, 2013 | 0 Comments

In these tough economic times, it might seem like a crazy idea to want to try and start your own business. Many corporate businesses have slowed or stopped hiring in response to the economic upheaval of the last couple of years. With wages shrinking and bills rising, the thought of leaving your current job might be a bit scary, especially if you aren’t sure what you plan on doing.

We’ve covered the different types of start ups you can launch on the cheap. Along with starting a business, one of the most important factors is financing – not just having the money to get things up and running, but making sure that you have enough to fuel your own living expenses and other bills, especially when you’re just starting up.

One of the best ways to ensure that you’ve got some money tucked away is by using a of certificate of deposit or CD. There are several different companies that offer CDs and their accompanying rates, but for this article, let’s find out why Discover has the best CD rates in comparison to the competition.

First things first however – what the heck is a certificate of deposit? CDs are a type of deposit account that offers higher rates of interest than a regular savings account; these are usually done with your personal or professional bank or that of another institution. The reason CDs are not only special, but popular ways for people to invest without the high risk factor of stock shares, is that they have federal deposit insurance, up to $250,000 worth.

The way you purchase a CD is with a fixed amount of money for a fixed period of time; you can choose six months, one year, or more. The bank then gives you interest at regular intervals; then when you decide to cash in on the CD, you get the money you invested, plus any interest that may have accrued. There is a penalty, however, should you decide to pull out your money before it matures. That goes for early withdrawal or even having to forfeit a portion of the interest you’ve already earned.

Obviously, it’s very important that you allow for the CD to reach the desired amount of maturity before you take it out.

Another important factor is knowing what type of CD you want; your financial goals, the length of the CD, how much interest you’ll be receiving, if the rate ever changes, and more. These things can be discovered through research when looking into a CD.

Now what a CD is, let’s look at how Discover offers several different types of CDs.

First off, Discover offers CDs with fixed amounts starting at three months and going up to that of ten years. Each have a set interest rate and APY (annual percentage yield), starting at 0.35% going up to 1.88%. In comparison with other banking institutions, these are very high yield CDs, as many institutions only offer .10% for three months and only go up to about .70% after ten years.

CDs with Discover start with a deposit of at least $2500. Even if this is as much as you can afford at the moment, with the high interest rates with Discover, you’re making a total savings of $2,693 after about five years. This is at the 1.90% interest rate. Should you be able to put away $100,000 for ten years, you’d wind up with a total savings of $120,710; the national average is only a little over $7,000. That’s a discrepancy of nearly $113,000.

For those of you that are connected online all the time, funding your CD can be easily done online through a transfer. When you set up your CD, you can ask to have the option for the ability to transfer money from a checking account into your CD account. You can also wire transfer money into your account, though there may be fees to do so.

So your CD is about to mature, but how will you know? Well luckily, Discover will notify you a few weeks before to let you know that your CD is about to reach maturity. It’s a bit like watching a child hit a milestone in their life; and if you want to think of your CD as your budding child, feel free! Just in case Discover doesn’t hear from you, they will renew your CD at the same rate it was before.

Maybe you’ve decided you need a lot more money for your start up than you realized. Well, that’s okay. You can call Discover and change the terms and balance amount of your CD. Remember the minimum amount that you were able to put in, the $2,500 for six months? Maybe you got a raise at work and want to up the amount by $500 or a $1,000. Well, that’s okay; you can do that. Maybe it’s going to take you two years instead of one to reach your goal. Still okay.

Discover currently has some of the best CD rates right now that can help you move forward with starting your own business. It’s a great way of setting aside your money before you business starts, that way you don’t have to worry about any finances as you begin the process of getting set up. It also gives you the time to truly decide what it is you want to do, as well as where you’d like to see the business after a year or five years; will you have more employees? More equipment?

Sometimes these unexpected growing pains can throw small businesses into a tizzy, but with your CD growing and maturing, you are set to handle any new editions that might happen. And if you think that maybe a business won’t happen for two and a half years, you can still keeping your CD growing or even adding more to it so that you can be financially, mentally, and emotionally ready to go about your career freedom.

With all the money you’re saving, turn that into the level of success you’re destined for!