If you want to have access to your money periodically, while receiving the highest interest rate, creating a CD (Certificate of Deposit) ladder may be a good choice.
As an example, instead of putting all of your money in a high-yielding 2-year CD, you can divide your funds into four equal parts and open four different CDs.
- The terms for these CDs would be staggered; open a 6 month, 12 month, 18 month, and a 24 month CD. Although the 6, 12 and 18 month CDs may have a lower interest rate, the goal is to eventually get all of your money into a 2 year higher interest rate CD.
- After 6 months, the first CD will mature and you can then renew the CD for a new 2 year CD. After 12 months, the second CD will mature and again you would renew the CD for a new 2 year CD.
- After 18 months, the third CD will mature and again you would renew the CD for a new 2 year CD.
- Now all of your money is in a longer-term 2 year CD, but the maturity dates for the CDs are staggered.
By using a CD ladder, all of your funds now earn the higher 2 year CD interest rate, while ensuring that a portion of your money is readily available every 6 months.
*This material is intended to serve simply as an informational or educational resource and not as investment advice. As your needs, goals and circumstances are unique, please consult a financial professional for advice.