Maximize Savings with a Certificate Ladder

Certificates are a great way to save and invest, while guaranteeing gains on your money. But did you know there is a strategic method for dividing and staggering certificates to help maximize your gains?

Many smart investors look to the “Certificate Ladder” strategy for managing and renewing their certificates. A CD ladder is a smart savings plan that helps you earn higher interest rates by dividing your savings into multiple CDs with staggered maturity dates.

How Does a CD Ladder Work?

1. Divide Your Investment: Split your total investment into equal parts.
2. Purchase Multiple certificates: Open certificates with different term lengths, such as 1-year, 2-year, 3-year, 4-year, and 5-yearss.
3. Staggered Maturity: Each certificate matures at a different time, giving you periodic access to your money.
4. Reinvest: When a certificate matures, you then reinvest in a new long-term CD to continue the ladder.
5. Access to Money: The ladder also provides access to funds at routine maturity intervals, should you need the money for another purpose.

Show Me an Example:

Ok, let’s say you have $10k you want to invest in a certificate. You can put it all in just one at the best term and rate currently available, or you can divide it, and stagger the maturity dates like this:

• $10,000 split into five CDs of $2,000 each:
  • $2,000 in a 1-year CD
  • $2,000 in a 2-year CD
  • $2,000 in a 3-year CD
  • $2,000 in a 4-year CD
  • $2,000 in a 5-year CD

When the 1-year certificate matures, you can reinvest it in a new 5-year term, maintaining a cycle of regular access while earning long-term rates.

Why Consider a CD Ladder?

• Higher Interest Rates: Longer-term certificates often offer better rates and more predictable returns than relying upon shorter terms.
• Liquidity: Access a portion of your savings at regular intervals.
• Reduced Risk: Diversifies your savings timeline, balancing returns and access.

Is a CD Ladder Right for You? 

• Are you seeking stable returns without market risk?
• Do you want periodic access to their part of your savings?
• Are you looking to maximize interest earnings over time

Currently, CFCU is offering great certificate specials to help you build ladders that maximize your returns.

Speak with a financial professional at CFCU to see how a Certificate ladder fits your financial goals!