Trust Deeds vs. CDs and Money Markets: Where Nevada Investors Park Cash
An investor I have worked with for years called me last week with money sitting in a bank. His 12-month CD had just matured, he had renewed a chunk of it, and the rest was parked in a money market earning something in the low fours. His question was simple and honest: “Beau, the bank is finally paying me a little. Why would I move any of this into a trust deed?” It is a fair thing to ask, especially with mortgage rates stuck near 6.7 percent and bank yields higher than they have been in years.
Here is the honest answer. A CD and a money market are built for safety and easy access to your cash, and a trust deed is built for income backed by real property. They are not competitors so much as different tools, and the right question is not which one wins but how much of your cash needs to stay perfectly liquid versus how much can work harder for a defined period.
What each of these actually is
A certificate of deposit is a fixed term deposit at a bank. You lock your money up for a set window, the bank pays you a stated yield, and the FDIC insures the balance up to the usual limits. A money market account is similar but keeps your cash available, which is why it typically pays a little less than a comparable CD. Both are, for practical purposes, as safe as anything gets in this country.
A trust deed is a different animal. When you invest in one, you are the lender on a real estate loan, and your money is secured by a recorded deed of trust against a specific Las Vegas or Henderson property. The borrower pays you interest, usually monthly, and the property stands behind the loan. There is no FDIC backing. Your protection is the equity cushion in the property and the loan-to-value ratio you insisted on before funding. That is a real difference, and any honest lender will tell you so up front.
The yield gap, and why it exists
Right now the best CDs are paying somewhere in the low-to-mid four percent range, and the strongest money market accounts are landing in the threes to low fours. Those are national high marks, not the average, and the average bank is paying far less than that. Nevada trust deeds have generally paid meaningfully more, often in the high single digits, because you are being compensated for taking on illiquidity and property risk that a bank deposit simply does not carry.
That gap is not free money. It is a payment for two things you give up. You give up instant access to your cash, because a trust deed ties your money to a loan that runs for a set term rather than a savings balance you can tap tomorrow. You give up federal insurance, and you replace it with collateral, which means the quality of the property and the size of the equity cushion become the thing that protects your principal. Understand what you are being paid for, and the higher yield stops looking like a gimmick and starts looking like a trade you can actually evaluate.
A CD protects your money with a bank’s promise. A trust deed protects it with somebody else’s real estate. Both can be sound. They just ask you to trust different things.
Liquidity is the real dividing line
The number that matters most in this decision is not the yield. It is how soon you might need the money. A CD locks you up for a term too, but the penalty for breaking it early is usually a few months of interest, and a money market lets you pull cash almost immediately. A trust deed does not work that way. Your capital is committed until the loan pays off, whether that is a bridge loan running several months or a longer note measured in a year or more. You can sometimes sell your position, but you should never fund a trust deed with money you might need next month.
This is why I walk every new trust deed investor through the same exercise. Separate your cash into buckets. The emergency reserve and any money earmarked for something in the next year belongs in the bank, full stop, earning whatever the CD or money market pays. Then look at what is truly long-term. Money you will not touch for a year or more is the money that can afford to chase the higher, property-secured yield, because it can sit through the full term of a loan without you needing it back early.
How the risk actually compares
It would be dishonest to pretend a trust deed carries the same risk as an insured deposit. A CD’s worst case is the bank failing, and the FDIC steps in. A trust deed’s worst case is the borrower defaulting, and your recovery then depends on the property’s value and where your loan sits against it.
That is why loan-to-value is the number I care about most when I place investor money. If a loan is written at a conservative share of a property’s value, there is a real equity cushion under your position, and even a default and foreclosure can leave your principal intact because the collateral is worth more than the loan. The risk is real, but it is one you can see, measure, and price before you ever wire a dollar.
The bottom line
If you need the money soon or you cannot stomach any principal risk at all, the bank is the right home for it, and today’s CD and money market rates are the best they have been in a long time. If you have genuinely long-term cash that you want working harder, a well-structured Nevada trust deed can pay you meaningfully more for accepting illiquidity and property risk you can actually evaluate. Most investors I work with do not pick one. They keep their safety money in the bank and put a defined slice of their long-term capital into trust deeds, so they get both the liquidity and the income instead of forcing a choice between them.
Questions I get after this
Can I get my money out of a trust deed early if I need it?
Not the way you can with a bank account. Your capital is committed until the loan pays off, so a trust deed is not the place for money you might need on short notice. In some cases a position can be sold or assigned to another investor, but that is never guaranteed and can take time. Fund one only with cash you can leave in place through the full term.
Are trust deed payments taxed differently than CD interest?
Both are generally taxed as ordinary interest income rather than capital gains, so the headline yield is not the after-tax yield in either case. Where they can differ is in a retirement account. Some investors hold trust deeds inside a self-directed IRA to defer or shelter that income. I am not a tax advisor, so run your specific situation past your own CPA before you assume anything.
How much of my savings should go into trust deeds versus the bank?
There is no single right percentage, and anyone who gives you one without knowing your situation is guessing. The framework I use is simple. Keep your emergency reserve and any money you need within a year in the bank, and only consider trust deeds for genuinely long-term capital. The right slice depends on your income needs, your other holdings, and how you feel about illiquidity.
What is the first thing you check on a trust deed before placing my money in it?
The loan-to-value ratio and the equity cushion behind it. I want to know that if the borrower stopped paying tomorrow, the property is worth enough to cover the loan with room to spare. After that I look at the borrower, the exit, and the loan position. The collateral and the cushion are what protect your principal when a deal goes sideways.
Want a second set of eyes before you move any cash?
Deciding how much of your savings stays liquid and how much can work harder is a personal call, and it should be made with your full financial picture in view, not off a single blog post. If you are weighing whether a Nevada trust deed fits alongside your CDs and money market, I am glad to walk through the tradeoffs with you, look at real loan-to-value numbers, and be straight about the risks so you can decide for yourself. Visit my Private Capital page or reach me through the contact page to start the conversation, and subscribe for future notes or follow along on Instagram and LinkedIn.
Beau McDougall is Executive VP of Private Capital at All Western Mortgage, NMLS #2611909. This article is educational only and is not investment or financial advice. All investments carry risk. Consult your own financial and legal advisors before funding a trust deed.
