With interest rates still low, it may the ideal time to build a laddered CD portfolio that will allow you to capitalize on rising interest rates in the future. Here are ways to employ this strategy to your advantage.
Instructions
1. Pick a set of dates in the future when you want your CDs to mature. It could be each year for 5 years or a longer period of time. But a shorter ladder may be more effective if you anticipate that rates will rise in the near future.
2. Find a bank or series of banks to invest your CDs in. Visit bankrate.com (see Resources below) to find the highest CD rates for a given maturity. Internet banks such as Everbank may also be good places to find higher rates.
3. Purchase your CDs in the amounts you need for each maturity. Specify whether you want the CDs cashed or rolled over when they mature. Consider your future cash flow needs and expenses when doing this.
4. Use a stockbroker or investment advisor to manage your CD ladder if you're not inclined to do so yourself. Edward Jones often has competitive CD rates, and this can provide you with a way to get some professional advice and assistance as well.
