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With so many ways to invest $100,000 in today’s economy, simply locking it away in a savings account doesn’t seem like the best idea. Or even a conventional one. But the economy millions of savers find themselves in this summer is far from conventional. With inflation now at its highest level in more than three years, job growth minimal and the potential for an interest rate hike following two years of rate cuts growing, savers may want to take a different approach to their money. And that could mean moving $100,000 into a certificate of deposit (CD) account now, even if it’s just temporary.
Fortunately, that’s exactly what a short-term account can offer. With a 3-month CD, for example, savers can earn a competitive interest rate while protecting their principal from adverse market conditions for the next 90 days, approximately. Then, in October, when the account matures, they can pivot their savings strategy based on market conditions then. In the interim, they’ll earn a competitive return, keep their principal secure and enjoy the advantages FDIC insurance offers on CD accounts worth up to $250,000.
Before getting started, however, it’s always critical to first understand the interest-earning capacity, especially with this much money at stake. So, how much interest will a $100,000 3-month CD account earn by October? Thanks to the account’s fixed interest rate this is easy to determine. Below, we’ll crunch the returns that savers will want to know.
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How much interest will a $100,000 3-month CD account earn by October?
The top 3-month CD interest rates range from 3.80% to 3.95% right now. Using those rates and the assumption that the account isn’t issued an early withdrawal fee, here’s how much interest savers can expect to earn with a $100,000 deposit once the account has matured in October:
- $100,000 3-month CD at 3.80%: $936.75 upon maturity
- $100,000 3-month CD at 3.90%: $961.06 upon maturity
- $100,000 3-month CD at 3.95%: $973.20 upon maturity
Savers stand to earn close to $1,000 with a CD of this size and length, and the money will be available rapidly. While that won’t make you rich, the account will offer a reasonable profit and security through current market uncertainty, neither of which can be dismissed in today’s inflationary environment. That said, it’s important to shop around for CD rates and lenders before getting started as online banks tend to offer more competitive offers than local institutions often do.
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The bottom line
With stocks, bonds, real estate and even alternative assets like precious metals readily available now, depositing $100,000 into a CD account may feel unusual. But in today’s uneven economic climate, an unusual approach may be exactly what savers need, even temporarily. A 3-month CD in this amount will leave savers with close to $1,000 in earnings by the early fall and it will be guaranteed in a way that other investments won’t be and the principal will remain untouched. Consider this savings account for your money now, then, while continuing to look for ways to grow it further once the funds become available again in October.