Older Investment Strategy Coming Back into Style

As interest rates have continued to rise, an investment strategy has risen like a phoenix from the ashes in 2023, behold the CD Ladder. Many of you may already have CD investments; for others, this might be your first look at CDs. Just one year ago, most CDs were paying between .5% to .9%, hardly even worth the time. Now, with some paying over 4%, they might be worth it.

So, what is the CD Ladder strategy? It involves splitting money up into equal parts and investing them in different-length CDs. Why not just invest it all into one for larger interest gains? If you place all your investment into one CD you run the risk of penalties if you need to withdraw the money for an emergency. By investing in different maturity dates, investors can create steady streams of income while maintaining appropriate liquidity for themselves.

The typical range for a CD Ladder is three months to five years. An example Ladder would be three months, six months, one year, three years, and five years. Upon maturity, you can continue to roll over into new CDs or change your investment strategy if interest rates begin to decline.

For more information, please reach out to the Professionals at The Center for Financial, Legal, & Tax Planning Inc., at (618) 997-3436.

***The above information is for general informational purposes only. It is not to be construed as Financial, Legal, or Tax Planning advice. Please reach out to a Professional if you have questions regarding these matters.***