3 Fantastic Reasons to Invest in a 100-Year CD

Among the things that can live to be a hundred years old -- giant tortoises, tubeworms, plastic bottles -- few would put certificates of deposit (CDs) on the list. Indeed, most long-term CDs mature within two to 10 years, and there are far fewer that have longer terms than that. But Walden Mutual Bank is now offering a CD that matures at the same pace as a sassafras or red maple: the 100-year CD, first of its kind, and perhaps the longest CD term you'll ever find.

Now, I know what you're thinking, because I was thinking it too. Why would anyone get a CD that will outlive them? It has a great rate of 4.75% that competes with the best CDs, but considering that it has a steep early withdrawal penalty -- 10 years' worth of interest! -- you'd have to keep your deposit in for at least that much time to avoid losing money.

But the more I thought about it, the more I came to realize there are some benefits to getting a 100-year CD. You may not enjoy its full fruition in your lifetime, but for the prudentialists out there, these three reasons might compel you to get one.

1. Build generational wealth

Generational wealth involves transferring assets -- such as cash, investments, small businesses, real estate, and other securities -- to your family members. For most families, generational wealth persists when each generation has more than enough financial security during their lifetimes, thus enabling them to leave assets behind for the next generation.

Our Picks for the Best High-Yield Savings Accounts of 2024

Capital One 360 Performance Savings APY 4.25% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of April 11, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings Member FDIC.	APY 4.25% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of April 11, 2024. Rates are subject to change at any time before or after account opening.	Min. to earn $0
American Express® High Yield Savings APY 4.25% Rate info 4.25% annual percentage yield as of July 1, 2024 Min. to earn $1 Open Account for American Express® High Yield Savings Member FDIC.	APY 4.25% Rate info 4.25% annual percentage yield as of July 1, 2024	Min. to earn $1
Citizens Access® Savings APY 4.50% Min. to earn $0.01 Open Account for Citizens Access® Savings Member FDIC.	APY 4.50%	Min. to earn $0.01

If building generational wealth is important to you, the 100-year CD from Walden Mutual Bank could present a unique opportunity. As The Ascent writer Kailey Hagen pointed out, investing $1,000 into a 100-year CD with a 4.75% rate would grow into $114,505.60 by the end of its term. In other words, with a four-figure deposit, you could bequeath six figures to your great (or great-great) grandchildren.

Larger amounts would mean leaving more money to your descendants. For instance, depositing $10,000 in the same CD would grow into more than $1 million by its maturity. While I wouldn't rely on CDs alone to build generational wealth -- real estate and other factors are also important -- doing so could reinforce your strategy and ensure your family is taken care of long after your death.

2. Withdraw interest periodically over time

The 100-year CD from Walden Mutual Bank comes with a strict early withdrawal penalty of 10 years' interest. But this only applies to your principal, not to your interest. In fact, like many CD providers, Mutual Bank will let you withdraw interest as it's credited to your account, penalty free. This could create a reliable stream of income over your lifetime, one generated from a competitive savings rate of 4.75%.

That said, withdrawing interest will reduce the effective rate on your CD. For example, let's say you deposit $100. After 100 years, you'll earn $10,261 in interest for a total of $10,361. But now let's say you withdraw all your interest every 25 years. The first 25 years you'll get $219.04, the second you'll get the same, and so on until you've withdrawn a total of $876. Because of your partial withdrawals, you've missed out on over $9,000 in interest.

3. Leave the money to charity

Finally, a 100-year CD could make a good donation to charity. In fact, this was how Benjamin Franklin helped the cities of Boston and Philadelphia long after his death. When he died, he gave about $4,000 to the cities with the explicit direction not to touch the funds until at least 100 years after he died (25% of it was not to be touched until the 200th anniversary of his passing). By 1994, his initial investment had grown to over $6.5 million.

In the same manner, you could add a charitable organization as the beneficiary of your CD, or open it in the organization's name. You might also ask Walden Mutual Bank if the organization can withdraw interest now, thus helping it in the short term. Keep in mind that the money you donate could also have some tax benefits, such as a deduction off your taxable income.

Of course, CDs aren't the only way to build wealth over a long period. Stocks and funds, for instance, could generate far more wealth, as could investing in real estate or opening a small business. But whereas each of these involves market risks, a 100-year CD offers guaranteed income -- at least so long as Walden Mutual Bank (an FDIC member) persists. It will take as long as some trees to mature, but could give generations to come a solid head start in life.