Don’t let high prices get you down this holiday season. You can outpace inflation and take advantage of high interest rates with a 澳洲幸运5官方开奖结果体彩网:top-paying CD or you can 澳洲幸运5官方开奖结果体彩网:start investing with a broker and capitalize on stock market gains.

Year to date, 澳洲幸运5官方开奖结果体彩网:the S&P 500 has a total return of 33.30%. That means if you were to invest $1,000 on Jan. 1 in an S&P 500 index fund, you’d have made $333.30 by now.

However, some experts and investors are wary of changes that could hurt the stock market, such as if President-elect Donald Trump's tariffs increase inflation and cause an economic slowdown. So far, however, markets have generally responded positively to his election. And typically, stocks trend upward regardless of 澳洲幸运5官方开奖结果体彩网:who is in the White House.

For those who prefer more certainty in their investments, 澳洲幸运5官方开奖结果体彩网:certificates of deposit (CDs) typically pay higher rates than savings accounts but less than stocks (on average). CD rates are also guaranteed if you don't cash 🍎out early. Right now, you can find CDs paying around 5.00%.

However, CD rates are also variable and may drop if the 澳洲幸运5官方开奖结果体彩网:Federal Reserve lowers the federal funds rate at its meeting next week. According to the CME FedWatch tool at 12:45 p.m. today, 88% of interest rate traders believe there will be a 25 basis point cut on Dec. 18, which would likely mean CD rates would start to decline as well. A CD interest rate is typically fixed, h﷽owever, so any rate cuts would only apply to new CD꧂s, not existing ones.

ℱDetermining which route to take—stocks or CDs—depends on factors such as your investment goals, timeline, and risk tolerance. Consider the following when making your choice.

The Stock Market Is Up, But Never Guaranteed

The stock market's high returns this year—in comparison to the latest inflation data showing a 澳洲幸运5官方开奖结果体彩网:2.6% increase𓄧—means that the more you invested in stocks this past year, the more you were able to offset any price increases and even expand your purchasing power. The problem, howe🦄ver, is that stock returns are never guaranteed. 

While you might be tempted to invest via an 澳洲幸运5官方开奖结果体彩网:online broker such as 澳洲幸运5官方开奖结果体彩网:Fidelity Investments or or work with a human broker who can provide financial advice and help you place trades, it's essential to underst🐼an🃏d that you could be risking losses or subpar performance.

For example, though the stock market is up about 33% this year, there have been periods when it's been down substantially. From July 16 through Aug. 5, the S&P 500 dropped by nearly 8%. If you got skittish and sold at that time, your returns wouldn't be as high as if you held until now. You might even fall into the cycle of selling low and then buying high after a recovery, which can result in negative returns.

The stock market’s strong run might not continue in 2025. And if you might need your money soon or want to ensure it holds its value, such as if you're building an emergency fund, investing in stocks via a broker could be risky. You might have to sell your investments when they're down rather than being able to sit patiently until they've ideally gained value.

CDs Typically Pay Less, But the Rate Is Gua൲ranteed

CDs typically pay lower rates in exchange for guaranteed returns, making them good options if you don't want to risk losses. That said, CDs typically carry penalties for early withdrawals, so you want to ensure you choose a CD term that aligns with when you might need the money. For example, if you plan to buy a home next year, perhaps putting funds for a down payment into a 12-month CD helps you earn a little extra without putting that money at risk.

The best short-term CD rates now outpace inflation in many cases, though if inflation increases while you're holding your CD, you could end up losing purchasing power. Yet the inflation trend line has been down, and the Fed has been lowering the 澳洲幸运5官方开奖结果体彩网:federal funds rate accordingly. This typically influences CD rates in the same direction, particularly for shorܫt-term CDs of 12 months or less, whereas long-term CDs are more influenced by future in🐭flation expectations. 

If you want to lock in a CD rate before they potentially fall further, now could be a good time to do so. For example, a 12-month CD from 澳洲幸运5官方开奖结果体彩网:Apple Federal Credit Union currently pays a 5.00% APY on a 12-month CD, so if you invested $10,ꦚ000, you'd earn $5🐷00 after a year. If that rate falls to, say, 4.75%, assuming the Fed cuts rates, you'd earn $25 less for the year—not a life-changing amount, but still some motivation to act now if you know you want to open a CD.

Optimize Your Returns With Both

So which one is the smarter choice? Both CDs and stock investments through a broker have their pros and cons—but you don't have to just choose one. Savvy investors often use a combination. 

Putting some funds into a CD can protect against the risk of a stock market decline, as you know you at least have those returns to draw from if needed. Even if you have to break the CD early in an emergency, the fees are typically a few months' worth of interest; your principal investment is left intact.

Meanwhile, keeping some longer-term funds in stocks can help you grow money for retirement or other future goals. Or if you have extra savings that you don't expect to need anytime soon, investing with a broker can help you potentially earn more, especially if you can wait out swings in the market.

Lastly, pay attention to fees. Not all brokers charge the same transaction fees or annual advisory fees. CDs also have varying fees, such as for early withdrawal penalties and investment minimums, so make sure you're choosing accounts that balance cost with the features you need.

How We Find the Best CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs to customers nationwide and determines daily rankings of the top-paying certificates in every major term. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), the CꩵD's minimum initial deposit must not exceed $25,000, and any specified maximum deposit cannot be under $5,000.

Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don't meet other eligibility criteria (e.g., you don't live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, 澳洲幸运5官方开奖结果体彩网:read our full methodology.