What Is A CD Ladder?
cd ladders are methods for strategically organizing your investment in certificates of deposit. the idea is to avoid tying up your entire principal in a single long-term certificate of deposit, which may be subject to adverse interest rate movements in the future. when you create a cd ladder, you break up your principal investment into several different cds with varying maturity dates. not only ? means that you have cds maturing every few months or years depending on the types of certificates purchased, but this strategy also allows you to have regular access to part of your principal and interest without imposing any early withdraw penalties. cd ladders also protect you against interest rate risk. let's see you deposit $10,000 into a five year cd paying 2% annual interest. in two years, cds may be paying more interest than 2%, but you are still be ? in to your five year cd and ? you want to pay penalties to withdraw before its maturity. if you create a cd ladder, then you know all of your savings are tied up into one individual long-term investment and you can invest your money into higher rate cds each time an older cd matures. in order to design a cd ladder, you need to decide how much money to invest in each group of cds with graduated maturity dates. doing so will diversify your investments in a way that allows you to benefit from interest rate changes and avoid unnecessary withdraw penalties.
- cd ladder・・・？
- certificate of deposit（cd）・・・譲渡性預金証書