Looking to the future, it is a good idea for families to have a financial plan. A key element of that plan is estimating what you will need money for and line up your investments to provide the cash you will need. Portions of your requirements are some distance into the future; other elements are sooner rather than later and frequently are associated with specific dates. Solid investment advice indicates that every portfolio or savings plan should be made up of varying levels of risk and potential profit. A combination of investments, like CDs or even life insurance, that are very conservative and quite predictable, and other investments like stocks, bonds, should make up the standard financial plan.

The further into the future the financial need is, the more you should use investments that are likely to produce a greater return. Money for retirement, if it is still a couple of decades away, should be invested in those instruments that can and will provide a greatest return, which normally means the stock market. Even within the stack market, there are more and less risky investments. The level of risk should be comfortable to the family, but some risk for far off needs is completely acceptable and wise. More conservative and predictable investments for near term requirements are also wise and complete a balanced approach to financial planning.

For those financial needs that are coming up rather soon, perhaps including college tuition or a down payment on a home, the average family will want to have money set aside that they can completely count on. Further, if you are approaching retirement, you should start to transfer your portfolio out of those investments that can have short term reductions in value and into more predictable and safe investments. For those purposes, CDs are a very appropriate vehicle. You can time the maturity of the CDs to the date when you will need the cash.

College tuition, for example, will become due on very predictable dates, generally the first of August and December for schools with a semester system. With multiple CDs and multiple maturities, you can organize the CDs to take advantage of special interest rates so as to maximize the extra cash that the special program will provide.

Generally, CDs issued by your bank is the best place to invest the money. You should make certain the institution is covered by FDIC so that you will have the extra assurance that at the maturity of the CDs you will receive the funds.

In summary, most investment advice would be to invest in CDs when the need for the money is within the upcoming five years and the dates are reasonably certain.