How it works

Instead of investing all your funds in one Certificate of Deposit, you place:
25% of your investment in a 6-month CD,
25% of your investment in a 12-month CD,
25% of your investment in an 18-month CD,
25% of your investment in a 24-month CD.

Then, every six months thereafter the maturing CD is rolled over into a 24-month CD. Eventually you have a series of four, 24-month CDs coming due at six-month intervals, leaving you relatively short-term access to your money, but increasing your interest yield by as much as 1.0%.

Security

By laddering four longer-term CDs, you get the advantage of higher interest earnings without increasing investment risk. This laddering approach is the same one many banks use to invest their money. Additionally, by having your CDs mature at six-month intervals you are able to minimize your exposure to interest rate fluctuations.

Easy Access

Laddering means that you are never more than six months away from being able to convert 25% of your investment into cash WITH NO PENALTY.

Increased Rewards

With laddering you get the advantage of higher interest rates provided by longer-term CDs. And, you don't have to buy higher risk investments that promise big profits, but also carry the danger of losing your principal. Actual interest yields may be increased by as much as 1.0%. Even greater interest yield increases may be achieved by laddering over longer periods of time.

Laddering may be for you if,

• You have a CD coming due and you'd like to reinvest at higher interest.
• The children are grown and you have some money to invest.
• You are about to receive a bonus or a retirement distribution.
• You are looking to convert money previously placed in high-risk investments into a safer, lower-risk investment.
• You want to reduce your exposure to fluctuations in CD interest rates.