Suppose you have set aside money for junior’s tuition bills that will need to be paid at the end of one, two, and three years. One appropriate investment plan in this case would be to buy three bank CDs with maturities of one, two, and three years. Bank CDs are even safer than money funds, typically offer higher yields, and are an excellent medium for investors who can tie up their liquid funds for at least six months. Bank CDs do have some disadvantages. They are not easily converted into cash, and penalties are usually imposed for early withdrawal. Also, the yield on CDs is subject to state
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