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Determine Whether A Laddering Strategy For Your Investment Certificates Is Right For You

Investment Certificate laddering strategy

Typically you can receive higher crediting rates on a Investment Certificate if you commit to leaving your money with the bank for a longer period of time. This lack of liquidity causes many people to choose shorter-term Investment Certificates at the expense of receiving the higher interest rates. Investment Certificate laddering is a strategy that gives you the benefit of receiving the higher-interest crediting rates of longer term Investment Certificates but still provide you with some liquidity. For example, rather than deposit $60,000 for a one-year period and renewing each year at a lower one-year rate, you could create a three-year ladder and put $20,000 in a one-year Investment Certificate, $20,000 in a two-year Investment Certificate and $20,000 in a three-year Investment Certificate at the higher interest rates. After the first year, you take the one-year Investment Certificate and purchase a new three-year Investment Certificate. After the second year, you take the initial two-year Investment Certificate and purchase a new three-year Investment Certificate, and do the same with the initial three-year Investment Certificate. Starting in year four, you will have the three Investment Certificates receiving the benefit of a three year rate but also have access to 1/3 of your money each year without penalty should you need it. Use this calculator to determine the additional interest you could earn with a Investment Certificate laddering strategy.

Investment Information and Assumptions

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Investment Interest Rates

This information may help you analyze your financial needs. It is based on information and assumptions provided by you regarding your goals, expectations and financial situation. The calculations do not infer that the company assumes any fiduciary duties. The calculations provided should not be construed as financial, legal or tax advice. In addition, such information should not be relied upon as the only source of information. This information is supplied from sources we believe to be reliable but we cannot guarantee its accuracy. Hypothetical illustrations may provide historical or current performance information. Past performance does not guarantee nor indicate future results.