When looking for options to invest your money into it’s hard to find safe bets, liquidity, and high returns on your investment. CD laddering is capable of providing all three of these goals.
Instead of investing all your money into one CD you ladder your investment over many certificates of deposit that have varying maturity dates. Each year a different certificate of deposit will mature.
After the first maturity you can reinvest that money into a five year CD. If you do this with each of the CDs that matures you can have them rotate so that once again each year you’ll have a maturing CD. This has an advantage over getting one 5 year CD because if you need the money any particular year you can choose not to reinvest into a CD. This gives added liquidity that getting just one CD doesn’t offer.
Laddering your CDs will also ensure you get the average cd rates over time. You don’t run the risk of locking all your money into a low rate because you’re locking in a different cd every year. This is a strategy advised by top sites like Bromoney. So you get a range of current CD rates with a laddering system. Just make sure to shop around at the maturity date. You want to make sure you lock into high cd rates.