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Not Just Numbers: Honest Conversations with a Financial Advisor (and Lawyer!) Podcast Ep.9


Certificates of Deposit (CDs): Low-Risk Investments in a Rising Interest Rate Environment

In today’s economic climate, certificates of deposit (CDs) have emerged as an attractive option for short-term savings due to rising interest rates. In the latest episode of “Not Just Numbers, Honest Conversations with a Financial Advisor and Lawyer,” hosts Madison Demora and Mike Garry explore the world of CDs, inverted yield curves, and the local small business success story of Panna Gelateria in Yardley, Pennsylvania.

Understanding the Benefits of Certificates of Deposit (CDs)

Mike Garry, a financial advisor and certified financial planner, explains that CDs offer a fixed rate of interest for a specific period, making them a low-risk investment for those looking to grow their money without the volatility of the stock market. When considering a CD, it’s essential to ensure that the product is insured or backed by the government. While uninsured options may offer higher interest rates, the added risk is not worth the potential loss of principal. Garry suggests that CDs are best suited for short-term savings goals, such as saving for a car, down payment on a home, or a wedding.
To make the most of CDs, Garry recommends a laddering strategy, where investors purchase multiple CDs with different maturity dates. This approach allows for more flexibility and the ability to take advantage of higher interest rates as CDs mature.

Navigating an Inverted Yield Curve with Certificates of Deposit (CDs)

The current economic landscape presents a unique challenge for investors: an inverted yield curve. In a typical market, longer-term investments offer higher interest rates than shorter-term options. However, in an inverted yield curve, short-term rates are higher than long-term rates.
Garry explains that an inverted yield curve can signal a potential recession or indicate that the Federal Reserve is increasing short-term rates while the market has not yet adjusted to longer-term rates. In this environment, investors must weigh the options of investing in shorter-term, higher-yielding funds, such as certificates of deposit (CDs), or purchasing longer-dated bonds in anticipation of future rate decreases.

The Sweet Success of Panna Gelateria

Shifting gears, the podcast welcomes Sally Gadea, chef and owner of Panna Gelateria and Bakery in Yardley, Pennsylvania. Gadea shares her journey of opening the business with her husband, Jemil, in 2021, amidst the challenges of the pandemic.
Panna Gelateria offers a unique combination of Italian-inspired gelato, pastries, and baked goods, all crafted with the couple’s extensive experience in the culinary industry. Gadea attributes their success to the quality of their products, the strategic location of their shop, and the support of the local community.
Despite the challenges of running a small business, including limited space and the demands of working with a spouse, Gadea remains passionate about her craft and the connections she has made with her customers. She emphasizes the importance of kindness and the impact that small interactions can have on someone’s day.
Gadea also highlights the value of collaboration among local businesses in Yardley and Bucks County. By supporting and promoting each other, these businesses create a tapestry of quality offerings that engage and attract customers to the area.

Key Takeaways

Certificates of deposit (CDs) offer a low-risk, fixed-rate investment option for short-term savings goals, especially in the current rising interest rate environment.
When considering CDs, prioritize insured or government-backed products and consider a laddering strategy to maximize returns and flexibility.
An inverted yield curve presents unique challenges for investors, requiring careful consideration of short-term and long-term investment options, such as certificates of deposit (CDs) and bonds.
The success of small businesses like Panna Gelateria highlights the importance of quality products, strategic location, community support, and collaboration among local businesses.
Kindness and genuine connections with customers can have a significant impact on the success and meaning of a business.

For more information on financial planning and wealth management, visit Yardley Wealth Management’s website or follow them on social media. To experience the sweet success of Panna Gelateria firsthand, visit their shop at 25 South Main Street in Yardley, Pennsylvania, or follow them on Instagram @PannaYardley.

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Michael Garry Yardley Wealth Management

Author Michael Garry Yardley Wealth Management

Michael Garry is a CERTIFIED FINANCIAL PLANNER™ practitioner and a NAPFA-registered Financial Advisor. He is a member of the National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association (FPA).

More posts by Michael Garry Yardley Wealth Management