Winding Down Friday: CDs or Not?

I’ve always found Bank CDs (Certificate of Deposit) to be an interesting instrument. While they do command a higher interest rate than their more liquid counterparts, they also lock up your money for a length of time.

So it is that I’ve always wondered where in the risk/use spectrum are CDs employed? For me, being young with plenty of time to weather a bear market and achieve equity returns over the long haul, most of my investment monies are allocated as such. I do keep an emergency reserve of cash on hand in a high-yield savings account, but it would appear counter-productive to buy CDs with this cash, due to the loss of liquidity as a consequence.

So to you readers, (Feel free to leave comments or drop me an email), what purpose does CDs serve you? Do they weigh in on the conservative side of your portfolio? Do equities make you nervous? Let me know!

-Xias