CD Ladder Strategy: Step Up Your Savings

This is Part 2 of a 4-part series on investment strategies for CDs.

Part 1: CD Savings Strategy Overview

Getting the most out of your savings is two-fold. You can: 

1. Maximize your earning potential with the best term and rate.
2. Keep your investment options flexible in case you need money for an unexpected expense.

The CD ladder strategy, along with great CD account rates, can help you meet these goals. 

With a CD ladder strategy, you divide your money between multiple CDs with different terms. As each one matures, you can choose to continue your growth or use the money for something else. 

How to Build a CD Ladder

Here’s an example of how the CD ladder strategy could work for you: 

Let’s say you start with $10,000 in your standard savings account. You’ll split that into four CDs with $2,500 each. 

You should open each CD at the same time, but with different terms. Ideally, each one would mature on a set schedule, like once every three months. 

As each CD matures, you have a few options for your funds: 

1. Re-invest in another CD with a similar term, or just let it automatically renew. This gives you a consistent investment and renewal period with CDs maturing on a predictable schedule.
2. Put your funds from each CD into long-term CDs, which generally have higher rates. Once those long-term CDs mature, you will have several that renew on a consistent basis.
3. Use the funds from your maturing CD on anything you need, like vehicle or home repairs, or other big purchases.

Take Advantage of CD Account Rates

CD account rates are typically higher than standard checking or savings account rates. But they still fluctuate based on market conditions. A CD ladder gives you the flexibility to make the right decisions with your investment as rates go up and down. 

If rates are still good when one of your CDs matures, you can continue your CD ladder strategy. If they have gone down, you may choose to withdraw your balance or find a better CD option. 

Try The CD Ladder Strategy

You can structure your CD ladder however you want, with any variety of rates and terms. Start growing your money with one or more Veridian CDs today. 

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Read more from the CD Savings Strategy Series: 

Part 1: CD Savings Strategy Overview