The key to becoming a savvy investor is getting the highest possible return on your investment while minimizing risk. This is why Certificate of Deposit accounts are very popular with even experienced investors. Here is a unique but widely popular strategy for CD investing that will allow you to stagger your maturity dates on various deposit accounts. This limits any potential losses due to early withdrawal penalty in the event you need your funds sooner than agreed in the account terms. Known as CD laddering, it should fit into any investment portfolio with minimal slack time between roll over. The primary point of this laddering strategy is allowing increased fluidity of funds.
It is easy to build your very own CD ladder strategy with ease. Simply select the financial institution, bank, or credit union, which offers the highest rate of interest returned and with terms that you can live with. However, instead of dumping all of your funds into a single account, you will stagger them as far as maturity dates. This is to allow for whatever tomorrow brings without worry and doubt. Once each matures, simply roll it over into a new one. Simple, isn’t it?
The reason it is called CD laddering is because the accounts are built in a stepping up of maturation dates in a manner, which resembles wrung on a conventional ladder. The main benefit, of course, is if you must withdraw one account, the remainder of your CDs can continue drawing interest without being disturbed.
There is no real trick to CD laddering. Only due diligence is required on your part in order to minimize risks. Remember to read all the fine print prior to purchasing your Certificate of Deposit accounts and soon you will see your nest egg grow.