BEST Way to Ladder CDs (with CD Ladder Spreadsheet)

Certificates of deposit (CDs) are excellent financial instruments that can be used to diversify your investment portfolio safely and easily.

CDs are timed deposits, so you know the exact maturity date when you can access the invested money and the earned interest, without being hurt by any early withdrawal penalty fees. Because of the nature of CDs a strategy that can be used to help ensure the highest rate of return is a CD ladder.

Are you looking to create the best CD ladder of 2010? You can do it with the following advice:

Basic CD Ladder Strategy

A CD ladder is when an assortment of CDs has been purchased to mature on a paced timeline of dates. Maturity dates for CDs can range from a couple of months to several years. You may opt into a CD ladder now since current CD rates are hovering at a mere 2% to just over 3%. If you were to lock into that low rate now for a year and the CD rates go up in six months, you would be forced to wait it out or suffer a penalty charge (typically a forfeiture of some interest) for withdrawing prior to the set maturity date.

With CD laddering, you will be able to periodically switch your CD investment which will allow you take advantage of higher interest rates as they are rolled back into the market. Some banks and credit unions will help their customers set up a CD ladder, but if you have the time, patience and basic ability to set up a spreadsheet, you can take matters into your own hands and not be tied down to one bank.

After making sure you have cleaned up your bad debt and have spare money to invest, take the time to locate the best yielding CDs out there and pay special attention to the minimum deposit required, as well as the length of the investment.

After you build a list, enter it into a spreadsheet and include the financial institution, interest earned, and arrange it by maturity date. Then take you assets, divide them into the CDs you have chosen and keep your hands off of them until your spreadsheet indicates the investments are about to come due. At that time, start the whole research process again, hopefully to find a CD with higher rate of return.

CD Ladder Tools

Here’s a helpful CD ladder spreadsheet to use as a guide:

CD Laddering (2-Year) Spreadsheet –

Of course, you are not limited to using the CD laddering example described here. A second expert opinion is detailed in How to Build a CD Ladder, a guide to CD laddering by a guest writer. Or, take a look at Go Banking Rates’ own infographic.

Not everyone is comfortable relying on their own computers skills to plan a CD ladder. A CD ladder calculator may be a more useful tool when you want the math done for you.

If you’re still not sure which strategy is for you, compare the best CD ladders to help with your decision.