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 specials for 13, 26 and 39 month terms 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!