Exploring Index-Linked CDs: Pros and Cons of Market-Tied Returns

An index-linked CD ties interest earnings to a specific market index, such as the S&P 500 or Nasdaq 100. Returns are based on the index's performance, with interest caps, participation caps, averaging, and calls potentially limiting earnings. ILCDs offer a hybrid between CDs and stock market investing, with no risk of losing deposited funds, but lack the fixed returns and low risk of traditional CDs and the potential for higher returns of the stock market.