Q:

Why are Vanguard CDs considered safe?

A:

Quick Answer

The Vanguard Group does not issue certificates of deposit, according to the company website. However, customers can buy CDs issued by commercial banks through Vanguard brokerage accounts. The Federal Deposit Insurance Corporation provides insurance for commercial banks that issue certificates of deposit, known as CDs, explains the FDIC. Therefore, CDs are some of the safest investments available.

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Full Answer

Individuals who buy CDs do so at the current market interest rate on the day of purchase. The rate usually remains fixed until the maturity date of the CDs, and on that date, the holders of CDs may sell the securities for face value plus interest accrued, explains Vanguard.

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