The local paper is running a misleading ad that offers "CERTIFICATE OF DEPOSIT - 6.00% APY - FDIC INSURED."

Nowhere in the ad does it mention that the company offering the "CD" is not a bank and is not FDIC insured, or that the CD is not a traditional CD as you would find at a bank.

The fine print: "Prices, yield, and availability are subject to market changes. May reflect current market discount. Payment Frequency: Monthly. Call Date: 02/15/2009. Callable CD Maturity Date 08/15/2023. Term 15 yrs. 10,000 minimum deposit. May be subject to market fluctuations if sold prior to maturity. FDIC Insured if held to maturity."

The only instrument with these features that I was able to find is a "market indexed certificate of deposit," or "indexed CD." This is a derivative backed investment tied to an index such as the S&P 500. The idea is to participate in market appreciation without risking principal so you, too, can dabble in derivatives.

Assuming that's what is being advertised, here are some things to consider with this type of investment which is most definitely not a traditional CD:

• Principal: Unlike a traditional CD, you may not be able to get back all your principal at early withdrawal depending on the performance of the related index and the availability of a secondary market for the CD.

• Liquidity: Unlike a CD, you can only sell ("cash in") an indexed CD if there's a market with a buyer. The seller is under no obligation to maintain a secondary market for these CDs. There may also be "liquidity date" restrictions, i.e. specific dates on which you can sell.

• FDIC insurance. This part is confusing. Your original "deposit" (investment) is insured if you hold the CD until maturity (15 years in the case of the CD being advertised in the local paper). "Interest" is not insured, however, because it is not paid until maturity. And as mentioned previously, you could lose principal if you have to sell the CD before maturity.

• Taxes: Interest is taxed at your income rate, not the capital gains rate. Further, taxes are due every year even though you aren't paid interest until maturity.

• Call options: The issuer may include a call option which lets them "cancel" your investment and pay you back with interest accrued up until the call date. (The CD being advertised in the paper has this feature.)

• Interest cap. Even though the CD is tied to a market index, the issuer can cap the interest. This may limit your upside potential. For example, the CD being advertised in the paper is capped at 6% for 15 years.

DISCLAIMER: I am not an investment expert and this is not investment advice and the above points are a summary of my understanding which may not be exact. For more info:

• A detailed explanation of Market Index Linked CDs

• USA Today: Linking CDs to stock index returns has rewards - and risks

• U.S. Securities and Exchange Commission: Certificates of Deposit Tips for Investors

Bottom line (from the Market Index Linked CDs explanation above):

Due to limited liquidity, MILCs are not suited for short-term trading. Further, no investor should purchase MILCs unless they are able to understand and bear the associated risks of market, liquidity, and yield. MILC investors should have the financial status and, either alone or with a financial advisor, knowledge and experience in financial and business matters sufficient to evaluate the merits and risks in light of their particular circumstance.

In other words, these are complicated investments which may not be suitable for typical savers looking for higher yields on traditional CDs.