Brokered CDs

In order to achieve a well-diversified portfolio, an investor might want to consider not only equities, but fixed income investments as well. One such type of investment that offers both a guaranteed return (if held to maturity), plus FDIC insurance1, is a Certificate of Deposit, or CD. Here at E*TRADE, investors can purchase CDs from hundreds of banks all over the country. These so-called Brokered CDs can be researched, purchased, and sold in one convenient place, our trading platform, using our Bond Resource Center.

Investing in Brokered CDs

For investors who have uninvested cash, purchasing a brokered CD that meets their specific timing needs and investment objectives could provide the benefits listed below.

Attractive yields

Yields can be higher with Brokered CDs when compared to bank savings and money market accounts.

All in one place

Brokered CDs can be purchased from hundreds of banks nationwide, using the E*TRADE trading platform.

Potential liquidity

A Brokered CD can generally be bought and sold on the secondary market, prior to maturity, with no early withdrawal penalty.2

Yield with protection

Brokered CDs not only offer a guaranteed return (if held to maturity), but they also include FDIC insurance of up to $250,000 per depositor, per insured bank.1

A variety of maturities

Available in a wide range of terms, from three months to over 30 years, Brokered CDs can be bought to match an investor’s personal timeline.

Low cost

Purchases of newly issued Brokered CDs are commission-free while secondary offerings are available at $1.00/bond.3

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Potential benefits

Brokered CDs can be attractive to investors who are nearing retirement, where capital preservation and income are an increasingly important goal.

Possible risks

Some Brokered CDs may come with a call feature, meaning that they could be redeemed by the institution prior to the maturity date. In addition, they are also subject to liquidity risk. This means that in the secondary market, there is no guarantee that an investor will be able to sell their CD, or may have to sell it at a loss.

The bottom line

Brokered CDs can offer an attractive opportunity for investors to find competitive interest rates for their cash, that includes FDIC coverage1, and might be helpful in addressing both short- and long-term investment goals.

E*TRADE tools and resources

E*TRADE offers an array of tools and resources to assist an investor in searching for both newly issued Brokered CDs and those available in the secondary market. For quick searches, click on the “Yield by Category” search table on the Bond Resource Center homepage. This resource aggregates the yield values from available offerings by asset class and maturity. In addition, to further tailor a search, our Advanced Bond Screener offers an investor a broader range of customizable criteria.