Any investor worth their salt knows that work is overrated. Home-grown, hard labor merely propagates a zero-sum game of economic cat-and-mouse. Coffers are not filled by old-school hard knocks; bank accounts brim through savoir-faire investing. The concept? Make money work while you don’t. That’s the basis of capitalism, and why higher rate CDs can generate income and enhance finances.

CDs are certificates of deposit, special savings accounts offered by banks, credit unions and thrift institutions. Bank CDs are insured up to $250,000 by the FDIC, and credit union CDs are insured by the NCUA. Principal placed in a CD cannot be withdrawn without penalty – usually the quantity of accrued interest but may include all funds except the original capital – until a stated maturation date, which usually ranges between 30 days and 10 years. Accounts with maturation dates longer than 10 years are termed IRA retirement CDs and pay the cumulative interest on the maturation date. Many CDs have initial deposit minimums, which affect interest rates, and some may have other withdrawal or transfer limits. Interest rates usually vary between .25% and 5% APY. Higher rate (high-yield) CDs are those with APY rates between 1.5% and 5%.

Higher rate CDs are an integral part of everyone’s prosperity portfolio. CDs bestow two main benefits: they generate income and enhance finances.

In the days of hard knocks, income was what you earned. Now, income is what you get. Principal placed in a CD generates income by compounding interest. This is important for two reasons: first, it increases the ratio of labor to profit; second, it offsets the potentially devastating effects of inflation.

The phrase “enhance finances” sounds grand but remains ambiguous. What does it mean in tangible terms? Enhanced finances are strong finances: a reliable retirement plan, children’s college fund, six-month emergency fund, paid bills, and general piece of mind. How can higher rate CDs check off this list?

CDs are part of a diversified portfolio. If stocks go south, bonds go bad, or mortgages crash and burn, the reliability of a CD helps to maintain monetary equilibrium.

For the spendthrifts and obsessive-compulsive shoppers, the inflexibility of a CD withdrawal can be a help, not a hindrance. A CD can be used to prevent the account holder from spending more than what should be spent.

A young man, even if he is exceptionally smart, won’t be going off to college before the scheduled due date. Higher rate CDs secure funds for future children’s education while keeping pace with inflation.

All it takes is a signature and deposit. That’s savvy investing, and that’s how higher rate CDs can generate income and enhance finances.