If you're laboring under the delusion that all certificates of deposit are risk free, it's time to wake up and smell the coffee.

Banks have come out with a dizzying array of CDs, variable rate, jumbo, callable and equity indexed. And these CDs pose a much bigger risk to investors.

Equity indexed CDs offer a return based upon a certain stock market index such as the S&P 500 or Russell 2000. Your money that you invest is guaranteed, but the return on your investment is not.

The return will do as well or as poorly as the stock index it's tied to. You might not get any return at all.

So if you're a senior on a fixed income, counting on CD interest to pay your bills, this is not an investment for you.

Also beware of callable CDs. They offer higher yields but require a 10, 20 or 30 year investment. Should you need the money sooner, the penalty for early withdrawal can be as much as 30%.

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