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As mentioned earlier, principal protection is one of the main advantages of Market-Linked CDs. Investors can rest assured that their initial investment is safe, even in the case of poor market performance.

A traditional CD will pay out a fixed interest rate based on the term of the CD. The investor knows the return they will receive based on the capital they invest. A market-linked CD has no fixed rate and its return is tied to the performance of the market.

A certificate of deposit (CD) is a time deposit account that pays a fixed interest rate over a period of time (generally ranging from 30 days to 5 years). Any early withdrawals of funds before the set maturity date come with a penalty fee.

Market-linked CDs are also FDIC-insured, on principal investment only, up to applicable limits. Growth ? The underlying market to which a market-linked CD is tied has the potential to provide returns in excess of the fixed rates on traditional CDs.

Certificates of deposit are issued by banks, credit unions, and other financial institutions. They provide a guaranteed interest rate and are often insured by the federal government. Mutual funds invest in a diversified portfolio of securities and their returns will fluctuate.

CDs are a safer and more conservative investment than stocks and bonds, offering lower opportunity for growth, but with a non-volatile, guaranteed rate of return. Virtually every bank, credit union, and brokerage firm offers a menu of CD options.

An index-linked term deposit is one where the rate of return is linked to the stock market and therefore offers potentially higher growth. Your principal is guaranteed, but the performance of the market determines how much money you'll make at the end of the term.

Index-linked CDs are similar to traditional Certificate of Deposit, but they allow the investor to participate in the appreciation, if any, of a particular stock index (like S&P 500), during the term of the CD.

A certificate of deposit (CD) is a savings account that holds a fixed amount of money for a fixed period of time, such as six months, one year, or five years, and in exchange, the issuing bank pays interest. When you cash in or redeem your CD, you receive the money you originally invested plus any interest.

It is like a savings account. For example, Joe invested $5,000 in CD with a bank at a fixed interest rate of 5% with 5 years maturity. Upon maturity, Joe's initial investment of $5000 had reached $6,382. The return on CD for the period of 5 years was $1,382.