CD Laddering: Low Risk, Steady Returns

If you’re looking for better returns than a savings account can deliver but you don’t want to lock up your money for a long period or take on the risk of investing in stocks or mutual funds, you may want to consider CD (certificate of deposit) laddering.

The strategy allows you to invest your money in CDs that mature at different times—in six months, a year, three years, or five years, for example.

The approach provides both liquidity—access to your cash—and growth.

Typically the shorter the CD term, the lower the interest rate you receive.

With CD laddering, you can invest some money for a short period at a lower rate to be sure that your money is accessible.

The other portions of your money can be invested in longer-term CDs at a higher interest rate.

When a short-term CD reaches maturity, you could take the cash or reinvest it in another short-term CD or move it into a longer-term one.

Since your money isn’t subject to fluctuating interest rates and you get a guaranteed interest rate, you’ll know exactly what you’ll have when your CD matures.

And since the funds are FDIC insured, you always know that your money is safe.

For help with structuring a CD ladder that fits your long- and short-term financial goals, call Liberty Bank at 773.384.4000