MLCDs combine the upside potential of the stock market with the security of the traditional CD. Advantages include:
- FDIC insurance–Your principal is insured to a maximum of $250,000 in aggregate for all deposits per institution for individual depositors and up to $250,000 in aggregate for all deposits per institution held in certain retirement plans and accounts, including IRAs.
- Protection–Most MLCD issuers offer principal protection. As long as you do not withdraw your funds before the maturity date (normally 5 to 7 years), you are guaranteed to get your principal back.
- Built-in constraints–Your funds can grow with the market but are locked up in much the same way as a traditional CD, effectively eliminating the temptation to buy and sell.
MLCDs may not be right for everyone. There are early withdrawal penalties, tax implications and possible high-end caps that may limit your potential returns. Talk with a BB&T Investment Services, Inc. Investment Counselor to learn whether MLCDs are well suited to your financial goals.