Calculate your potential returns on long-term brokered certificates of deposit.
Initial Investment:$0.00
Total Interest Earned:$0.00
Average Annual Earnings:$0.00
Total Value at Maturity (Year 5):$0.00
*Calculations assume Annual Percentage Yield (APY) compounding annually for the full 5-year term. Schwab Brokered CDs typically pay simple interest which may not automatically reinvest.
function calculateSchwabReturns() {
// 1. Get Input Values
var principalInput = document.getElementById('cdPrincipal').value;
var apyInput = document.getElementById('cdApy').value;
var termInput = document.getElementById('cdTermLength').value;
// 2. Validate Inputs
if (principalInput === "" || apyInput === "") {
alert("Please enter both a Deposit Amount and an APY %.");
return;
}
var principal = parseFloat(principalInput);
var apy = parseFloat(apyInput);
var term = parseFloat(termInput); // Should be 5 based on HTML, but parsing for safety
if (isNaN(principal) || principal <= 0) {
alert("Please enter a valid positive deposit amount.");
return;
}
if (isNaN(apy) || apy < 0) {
alert("Please enter a valid APY percentage.");
return;
}
// 3. Calculation Logic
// Formula: A = P * (1 + r)^t
// We use APY as the effective annual rate 'r'
var rateDecimal = apy / 100;
var totalValue = principal * Math.pow((1 + rateDecimal), term);
var totalInterest = totalValue – principal;
var annualAverage = totalInterest / term;
// 4. Update the DOM
document.getElementById('resPrincipal').innerHTML = "$" + principal.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resInterest').innerHTML = "$" + totalInterest.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resAnnual').innerHTML = "$" + annualAverage.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resTotal').innerHTML = "$" + totalValue.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
// 5. Show Results Section
document.getElementById('resultsDisplay').style.display = "block";
}
Understanding Schwab 5-Year CD Rates
Investing in a 5-year Certificate of Deposit (CD) through Charles Schwab can be a strategic move for investors looking to lock in yields for the long term. Unlike standard savings accounts where rates fluctuate daily, a 5-year CD guarantees a specific interest rate for a full 60-month period. This calculator helps you estimate the growth of your capital based on current Schwab APY offerings.
Brokered CDs vs. Bank CDs
It is important to understand that Charles Schwab primarily offers Brokered CDs. While these are still FDIC-insured (up to limits) by the underlying bank that issues them, they function differently than a CD you might open directly at a local bank branch:
Liquidity: If you need to exit a Schwab Brokered CD before the 5-year term is up, you generally sell it on the secondary market rather than paying a fixed penalty. This means you could lose principal if interest rates have risen since you bought the CD.
Interest Payouts: Many brokered CDs pay out "simple interest" (coupons) into your brokerage account cash balance, rather than automatically compounding inside the CD. The calculator above assumes you reinvest these earnings to achieve the APY effect.
Selection: Schwab allows you to choose from CDs issued by banks all over the country, often allowing you to find higher rates than your local bank offers.
Why Choose a 5-Year Term?
Selecting a 5-year term is a commitment to the "long end" of the cash deposit spectrum. Here is why investors choose this duration:
Pros of 5-Year CDs
Cons of 5-Year CDs
Rate Locking: If the Federal Reserve cuts rates, your high yield is protected for 5 years.
Inflation Risk: If inflation spikes, your fixed return might lose purchasing power.
Higher Yields: Historically, longer terms offer higher APYs (a normal yield curve).
Opportunity Cost: You cannot easily move money to better investments without selling.
Predictable Income: Great for retirees needing steady, guaranteed cash flow.
Market Value Fluctuation: Brokered CDs fluctuate in price if sold early.
How to Use This Calculator
To get the most accurate estimate for your Schwab CD:
Check Current Rates: Log in to your Schwab account or check their public fixed income page to find the current 5-year CD rate (often listed as the "Coupon" or "YTM/APY").
Enter Deposit: Input the amount you plan to buy (Brokered CDs are usually sold in increments of $1,000).
Review Earnings: The calculator shows you the total interest earned over the 60-month period.
Building a CD Ladder
Instead of putting all your funds into a single 5-year CD, many Schwab investors utilize a CD Ladder. This involves buying CDs with varying maturity dates (e.g., 1-year, 2-year, 3-year, 4-year, and 5-year). As each CD matures, you reinvest the cash into a new 5-year CD. This strategy blends the high yields of long-term CDs with the liquidity of having a portion of your money mature every year.