In this video, I'm going to show you how to Create a CD Ladder! (Awesome Savings Strategy)!!!

A CD ladder is a savings strategy to spread a lump sum of cash across multiple certificates of deposit to take advantage of higher rates — usually in long-term CDs — while freeing up portions of that money at short-term intervals.

CDs tend to have the highest interest rates among savings accounts. The trade-off is that you lose access to funds for periods of time. A CD ladder provides an effective alternative to putting a lump sum of money in one short- or long-term CD. A short-term CD is generally one year or less, and a long-term CD is four years or longer. CD ladders usually have midrange CDs, which include two- and three-year CDs.

CD laddering provides several benefits:

Increased accessibility: Your cash will become available to you at frequent intervals. Remember that CDs often have early withdrawal penalties if you break the seal before the term ends. (Learn more about how penalties work.)

Flexibility: You can decide how you want to split up your investments and whether to reinvest each time a CD matures.

Better interest rates: You’ll be able to choose longer-term CDs with higher rates and still have certificates maturing regularly. Generally the longer a CD's term — and sometimes the larger your deposit — the higher your rates.

Reduced risk of missing out on future high rates: If interest rates go up after opening one CD, you can take advantage of the higher rate the next time you open a CD. On the flip side, if rates fall, you still have money invested in long-term CDs that come with higher rates.

Multiple maturity dates to keep track of: Starting the day a CD ends, you generally have a short time window of about one to two weeks to withdraw funds from a CD penalty-free. Otherwise, banks may automatically renew CDs for the same term originally chosen.

No guarantee that the rate of return will beat, or even be close to, inflation: What a CD ladder offers is multiple opportunities to lock in CD rates at different times. This strategy can be helpful especially during a rising-rate environment, but inflation may still play a heavy hand in your finances.

This video is not financial advice, it for entertainment purposes only.

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