steps to build a CD ladder
5 year CD ladder: a simple example
total investment = $25,000
In this example, you can withdraw $5,000 plus interest earned annually as your CDs mature.
potential interest earned after [term] years:
The above calculations are based on your initial investment amount and today’s rates. Rates of future CD rollovers will reflect current market conditions at that time.
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CD laddering allows you to invest money in both short-term and long-term CDs so that you can benefit from higher earnings while having greater access to your funds. Benefits include:
- Access to longer-term rates
- Increased funds availability
- Limited interest rate risk
Building a CD ladder is easy. Follow these 3 simple steps:
1. Divide your total investment across multiple CDs with different maturity terms.
2. At Maturity of each CD, roll over your earnings into the longest-term CD within your ladder.
3. After the 1st rollover, CDs will automatically renew for the same term at maturity.