A certificate of deposit (CD) ladder is a savings strategy employing multiple CDs with staggered maturity dates. An online tool designed to assist with this strategy allows users to input desired deposit amounts, interest rates, and term lengths to visualize potential returns and maturity schedules. For example, a user might input three CDs, each with different terms (e.g., one year, two years, five years), to model a staggered approach. The tool then calculates the combined interest earned and displays a timeline of when each CD matures.
This approach to CD investment offers increased liquidity compared to placing all funds into a single, long-term CD. As each CD matures, the investor can reinvest at potentially higher rates or access the funds. This strategy gained popularity as a way to balance the desire for higher returns from longer-term CDs with the need for access to funds in case of unforeseen circumstances. Historically, laddering has provided savers with a predictable income stream and a degree of flexibility.
