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Investment laddering strategy

Typically you can receive a higher interest rate on an investment 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 investments at the expense of receiving the higher interest rates. Investment laddering is a strategy that gives you the benefit of receiving the higher interest rates of longer term investments but still provide you with some liquidity. For example, rather than invest $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, $20,000 in a two-year investment and $20,000 in a three-year investment at the higher interest rates. After the first year, you take the one-year investment and purchase a new three-year investment. After the second year, you take the initial two-year investment and purchase a new three-year investment, and do the same with the initial three-year investment. Starting in year four, all three investments will be earning a three-year rate but you will have access to one-third of your money each year without penalty. Use this calculator to determine the additional interest you could earn with an investment laddering strategy.

Investment Information and Assumptions


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.