MOLDENHAUER & CO., INC.

FREQUENTLY ASKED QUESTIONS

Why should I invest my money in anything other than CD's?

Certificates of Deposit available at banks, and similar products available from insurance companies and elsewhere, provide their owners with extremely safe and predictable returns on their investment. These instruments are appropriate for some portion of almost everyone's portfolio. As with most things in life, however, there's a trade-off between safety and potential returns. History has proven that, over longer terms, other investments can and do yield a greater rate of return to their owners.

Many people are cautious, sometimes overly so, about "investing" their money because of the horror stories they've heard from friends and acquaintances. CD's have a deserved reputation for safety, which allays these fears, and these people ignore the opportunity for higher returns in favor of investing in something that is easier to understand and has a solid track record of not providing an embarrassment to the ego of the investor who has picked the wrong place to put his or her savings. Others quite correctly refuse to invest money into things they don't understand; and while CD's are conceptually easy to understand, the myriad of other prudent and appropriate investments contain some level of complication about which the average person has little or no knowledge. They, therefore, give up the potential for higher rates of return instead of spending the time to learn about other investment vehicles. Other folks have developed a level of trust with their local banker or insurance agent and are hesitant to relinquish any sort of control to anyone with which they have a less established relationship.

So, the answer to the question above is: A prudent investor will diversify his portfolio in several ways. Diversification is the topic for another discussion but, suffice it to say that buying CD's exclusively for a nest egg is usually not the "best" way to manage it.